Ithaca boss explains firm’s decision to push for a merger with Eni

Ithaca Energy plans to double-down on UK investment by merging with Eni, despite possible punitive taxes under a Labour government.

Analysts have questioned the mooted merger given Ithaca also revealed a £395 million impairment linked to the windfall tax.

Giving the reasoning for homing in on the UK, Ithaca chairman Gilad Myerson told our sister website Energy Voice he’s confident whichever party is next in power will support domestic oil and gas production.

Mr Myerson said that, given the UK relies on oil and gas for around 80% of its energy – and 50% of its overall need is imported – a decision is needed on producing domestically or not.

“If we import energy, we are reliant on other countries for energy security, we are providing other countries with jobs, we are providing other countries with tax revenues, and we are increasing our own CO2 per barrel,” he said.

“The obvious conclusion is that the UK should be looking to generate its own energy, and generate its own oil and gas, rather than import.

“The UK, we believe, will eventually make the right decisions because currently 80% of the UK’s energy is oil and gas, it’s not going to decline as fast as many believe, and therefore we want to be a core producer of energy for the UK.”

Mr Myerson also noted on an investor call that much of the synergies on operations, relationships and capabilities lie within the UK.

A merger would create a “powerhouse” in the UK sector to create one of the largest players, with more than 100,000 barrels of production per day and 650 million barrels of reserves.

The deal, should it go through, would see the merger of Ithaca Energy and Eni’s UK operations – the latter recently acquired the business of Neptune Energy.

Mr Myerson said the firms’ Aberdeen operations would be brought into one building.

He said the deal was still being analysed “in its entirety” but didn’t expect “a huge amount of redundancies”.

Mr Myerson also said having the Italian major as a partner on the Cambo oilfield could unlock it, though questions remain on the timeline for FID.

He said the deal aims to replicate Eni’s success in other parts of the world.

Merger would see Eni own between 38% and 39% of the enlarged group.

He said: “They’re an outstanding operator, very entrepreneurial organisation, they bring significant strengths into such a partnership.

“We’ve seen it elsewhere, we’ve seen it in Var Energi, where the parties with Hitec Vision has yielded fantastically capable and value generating company, we’ve seen it in Azule, where the partnership with BP has once again created a fantastic company.

“And we’re hoping to create that type of a partnership in the UK.”

Ithaca Energy chairman Gilad Myerson.