Ithaca Energy announce is to acquire Chevron North Sea Limited for $2 billion. The transaction will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the Company, resulting in an approximately 150% increase in the proven and probable (“2P”) reserves of the Company and a 300% increase in forecast 2019 production.
Pro-forma the transaction, Ithaca’s asset base is estimated to consist of 2P reserves of approximately 225 million barrels of oil equivalent1 (MMboe) plus a further 45 MMboe2 of proven and probable contingent resources associated primarily with additional near-field development and infill drilling opportunities. The enlarged portfolio, encompassing 18 producing field interests in total, is forecast to deliver pro-forma 2019 production of approximately 80,000 barrels of oil equivalent per day (60% liquids) at an operating cost of approximately $17 per barrel of oil equivalent.
As part of the transaction approximately 500 employees will transfer to the Company, of which around 200 work offshore on the operated assets.
With the addition of the high quality, long life assets that characterise the CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of the Company and establishes Ithaca as the second largest independent oil and gas producer in the UK North Sea. The transaction provides a material step up in the scale and breadth of the Company’s producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cashflows of the business and enables accelerated monetisation of Ithaca’s existing $2.2 billion of UK tax allowances.
The transaction has an effective date of 1 January 2019 and is expected to complete around the end of the third quarter of 2019 following approval of the acquisition by the UK Oil and Gas Authority. Taking into account the interim period cashflows that are forecast to be generated by CNSL from the effective date, it is anticipated that the price payable at completion will be around $1.65 billion, subject to adjustments for the transfer of working capital.
Ithaca Energy based in Aberdeen, UK, is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group, Israel’s leading integrated energy company.
(Source Ithaca Energy – Image: Chevron UK assets/Chevron)