North Sea oil firm may be merged with international player by its Israeli owner
NORTH Sea-focused Ithaca Energy’s Israeli owner has said it is in talks about a plan to merge the business with an international firm in a move that could help it recoup some of its investment in the company.
Delek Group told investors it is holding discussions with third parties to assess the possibility of a merger of
Ithaca with international firms in the energy field.
The deal under discussion would be expected to leave Aberdeen-based Ithaca with a stake of at least 50 per cent in the enlarged energy business and to trigger a cash payout to Delek.
The group noted its intention would be to turn the merged business into a public company with its shares traded in London
Delek gave no details of the firms it is in talks with regarding Ithaca, which it acquired in a £1 billion deal in 2017.
Ithaca has been considering returning to the stock market through a flotation.
Delek’s plans for the business have been complicated by the sharp fall in oil and gas prices triggered by the fallout from the coronavirus crisis.
Ithaca cut the valuation of its assets by $795 million in the first quarter to reflect “the historic collapse in oil and gas prices”. However, the company has continued to generate profits in the North Sea, where it can produce oil and gas relatively cheaply.
Delek noted yesterday the amount of cash generated by Ithaca from operations increased more than six-fold annually in the second quarter, to $178m. Ithaca felt the benefit of the $2bn acquisition of a portfolio of North Sea assets from Chevron it made last year.
Last week North Sea veteran Bill Dunnett succeeded Les Thomas as Ithaca’s chief executive.