Ithaca Energy (ITH) H1 2024 Fixed Income earnings summary

Executive summary

• Announced and detailed the transformational business combination with Eni UK, expected to close in early Q4 2024, creating the second largest independent operator in the UKCS and the largest resource base in the region.

• Released H1 2024 results, highlighting strong cash flow generation, robust liquidity, and continued execution of the buy, build, boost strategy, including progress on Captain EOR Phase II and Rosebank subsea work.

• Declared a $100 million interim dividend and reaffirmed commitment to distribute 30% of post-tax CFFO, with ambition for special dividends up to $500 million per annum.

• H1 2024 production was slightly below expectations due to short-term non-operated issues, now largely resolved, with stronger H2 production anticipated.

Financial highlights

• H1 2024 adjusted EBITDAX was $533 million, with nearly $100 million contributed by the hedge book.

• Net cash flow from operating activities was $560 million; statutory net income was $106 million.

• Maintained over $1 billion in liquidity and a low net debt to EBITDAX ratio of 0.4x at end of June.

• H1 2024 production averaged 53.0 kboe/d, with 69% liquids.

• Operating costs net of tanker costs and tariff income reduced to $263 million, but unit opex rose to $27.3/boe due to lower production.

Outlook and guidance

• FY 2024 combined group production guidance revised to 76–81 kboe/d; standalone guidance 54–57 kboe/d.

• Net operating cost guidance reaffirmed at $650–730 million (combined) and $540–590 million (standalone).

• Rosebank capex guidance lowered to $170–195 million; cash tax guidance reduced to $390–410 million (combined).

• Organic production potential of over 100,000 barrels/day for 10 years in the UK, with $10 billion pre-tax cash generation potential over 2025–2029.

• Dividend commitment for 2024 and 2025 remains at 30% post-tax CFFO, with ambition for up to $500 million in total annual distributions.