Delek Group Ltd. (TASE:DLEKGNorth Sea energy exploration and production unit Ithaca Energy (LSE: ITH) has agreed to buy Italian energy major Eni’s oil and gas assets Eni UK in the North Sea, a months after announcing it was in talks for the deal.
In this latest in a series of acquisition deals, Ithaca will pay $940 million in stock, giving Eni a 37.3% stake in the Delek unit. Delek itself, controlled by Yitzhak Tshuva, will retain a 52.7% stake in Ithaca, up from almost 90% before the deal. 10% of Ithaca shares will continue to trade on the London Stock Exchange.
Ithaca is listed with a market capitalization of £1.2 billion ($1.5 billion), while Eni UK was valued at $940 million for the purposes of the merger. The deal will give the combined company a valuation of at least $2.5 billion. The transaction should be finalized at the end of the second quarter of 2024.
After the agreement, Ithaca’s production potential (oil and gas) will almost double to 110,000 barrels of oil equivalent per day, compared to 60,000 barrels of oil equivalent per day currently. Before the deal, 70% of Ithaca’s assets were in oil and 30% in natural gas, while Eni UK’s assets were split 60% in oil and 40% in gas.
Ithaca expects the company’s total reserves, following the closing of the agreement, to increase by approximately 100 million barrels of oil equivalent to approximately 660 million barrels of oil equivalent over a period of 15 years. Given that Eni UK’s reserves extend for 6-8 years, Ithaca’s objective under this agreement is to increase production immediately and generate greater cash flow. Ithaca estimates that once the transaction is finalized, it will distribute a dividend of $500 million in each of the next two years.
Ithaca had its IPO on the London Stock Exchange in late 2022 with a valuation of £2.5 billion ($2.9 billion) and has since seen its market capitalization fall 50% to $1.2 billion. of pounds sterling. Since negotiations were announced last month to buy Eni’s UK assets, Ithaca’s share price has fallen a further 18%, mainly in the two days following the publication.
The decline in Ithaca’s share price was mainly due to lower revenues and profits following the fall in oil prices, and the new tax on oil and gas in the United Kingdom (known as EPL ), at the rate of 35% of profits, which was imposed following the surge in energy prices in 2022.
In 2023, Ithaca reported revenue of $2.3 billion, down 11% from 2022, while its profit plunged 79% to $216 million. In 2023, Eni UK reported revenue of $980 million and profit of $278 million, down 42% and 72% from 2022, respectively.
The companies believe the merger will also result in an increase in the market value of Ithaca’s stock and increase the value of the combined company.
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Jefferies was the exclusive advisor to Ithaca on the deal.
Published by Globes, Israel Business News – fr.globes.co.il – April 25, 2024.
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