Ithaca Energy earnings slide amid production decrease

(Sharecast News) - Exploration and production company Ithaca Energy said in its half-year results on Thursday that amid a decrease in production, it achieved adjusted EBITDAX of $533m, down from $979.7m in the first half of last year. The FTSE 250 company said production averaged 53,000 barrels of oil equivalent per day for the first half of 2024, down from 75,800 daily barrels in the same period last year, primarily due to operational issues at non-operated joint venture sites.

That decline impacted net income, which stood at $105.7m, compared to $159.6m in the first six months of 2023.

However, Ithaca's focus on cost control helped reduce operating costs to $263.3m.

Ithaca said its recent business combination with Eni UK's upstream oil and gas assets, announced in April, was set to transform the company into a major player in the UK Continental Shelf (UKCS).

The merger would position the combined group as the largest resource holder in the UKCS, with a forecasted production of 100,000 to 110,000 barrels of oil equivalent per day for 2024.

It said the integration would also enhance Ithaca's platform for both organic and inorganic growth, with a significant cash flow potential of $10bn over the next five years.

The company declared a $100m interim dividend for September, and reaffirmed its commitment to delivering up to $500m in total dividends annually for 2024 and 2025.

Ithaca said its liquidity position remained strong at $1.03bn, with a reduced net debt of $506m, reflecting ongoing financial strength and a strategic focus on shareholder returns.

Operationally, Ithaca made significant progress in its Rosebank project and Captain Enhanced Oil Recovery Phase II, while also addressing production issues at key fields.

Looking ahead, the company revised its full-year 2024 production guidance for the combined group to between 76,000 and 81,000 barrels of oil equivalent per day, reflecting the challenges faced in the first half.

"I am pleased to report continued execution against our 2024 strategic priorities in the first half of the year and a strong period of cash flow generation," said interim chief executive and chief financial officer Iain Lewis.

"With a robust liquidity position at the end of the first half, and increased financial strength from the addition of Eni UK's unlevered assets, following completion, we have significant financial firepower to support the delivery of the group's strategy and returns to shareholders, while supporting a pathway to investment grade."

At 0940 BST, shares in Ithaca Energy were down 1.98% at 128.4p.

Reporting by Josh White for Sharecast.com.