Ithaca Energy sees profits fall as production falls

Ithaca Energy’s net profit fell nearly 34 percent in the first half of the year, hit by lower production, falling natural gas prices and writedowns.

The FTSE 250-listed North Sea oil and gas group on Thursday cut its full-year production forecast to 76,000-81,000 barrels of oil equivalent per day (boepd), from 80,000-87,000 boepd previously expected.

That followed a decline in production to 53,000 boe/d in the six-month period ended June 30, from a year-ago level of 75,800 boe/d.

Down: Ithaca Energy shares down more than 20% in past year

The company said its production was impacted by operational issues at non-operating joint ventures and infrastructure, as well as planned outages across its serviced portfolio.

Ithaca said it saw gas prices fall to $92 per barrel of oil equivalent (boe) in the first half of the year, after hedging against last year’s level of $125 per boe.

The group recorded net income of $105.7 million in the first half of the year, compared with $159.6 million a year earlier. During the reporting period, it incurred impairment charges related to decommissioning liabilities of $19 million.

Ithaca has lowered its capital cost forecast for its Rosebank oil project in the North Sea Basin to $170-195 million from a previous forecast of $190-230 million, as it plans to begin producing oil there by 2026/27.

The Company announced its first dividend for 2024 of $100 million, with the goal of increasing the total payout of special dividends to $500 million annually.

Acting Chief Executive and Chief Financial Officer Iain Lewis said: “I am pleased to report that we have delivered consistently on our 2024 strategic priorities during the first half of the year and have enjoyed a period of strong cash flow generation.

“With a solid liquidity position at the end of the first half of the year and the enhanced financial strength gained from the acquisition of Eni UK’s unleveraged assets following the completion of the transaction, we have significant financial strength to support the execution of the group’s strategy and shareholder returns, while helping us achieve investment grade.”

Shares in Ithaca Energy fell 2.29 per cent, or 3.00 pence, to 128.00 pence on Thursday, after falling more than 20 per cent in the past year.

In April, Ithaca agreed to buy almost all of Eni’s oil and gas assets in the UK for around £754 million in shares.

Peel Hunt analysts said: “The introduction of an unlevered ENI UK portfolio from Q4 should enhance Ithaca’s financial strength and improve visibility into long-term production cash flows, which will translate into sustained, significant shareholder returns.”

DIY INVESTMENT PLATFORMS

AJ Dzwon

AJ Dzwon

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free ideas for investing and managing funds

interactive investor

interactive investor

Flat fee investing from £4.99 per month

Saxophone

Saxophone

Get £200 cashback on transaction fees

Trade 212

Trade 212

Free transactions and no account fees

Affiliate links: If you choose a product This is Money may earn a commission. These deals are selected by our editorial team because we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investment account for you