Home Fossil Energy Ithaca-Eni upstream oil & gas combination gives birth to UK’s ‘largest resource holder’ in North Sea
October 3, 2024,
by
Melisa Čavčić
Italy’s energy giant Eni has fused its upstream assets in the UK, excluding East Irish Sea ones and carbon capture, utilization, and storage (CCUS) activities, with Delek’s Ithaca Energy, a North Sea oil and gas operator and producer. The combination enables the duo to expand their footprint on the UK Continental Shelf (UKCS), setting up the UK’s second-largest oil and gas independent operator with the potential to eclipse Harbour Energy as the top producer on the UKCS.
Cygnus gas field in the southern North Sea; Source: Neptune Energy, which became part of Eni following merger and is now part of enlarged Ithaca Energy
Eni confirmed an official agreement for the business combination with Ithaca almost a month after the pair entered into an exclusivity agreement regarding the potential upstream merger. The two players were expected to combine the Italian oil major’s UK upstream business with the existing Ithaca business, enabling the enlarged entity to contain stakes in six of the ten largest fields and the top two largest development fields on the UKCS, including Rosebank, Cambo, Schiehallion, Mariner Area, Elgin/Franklin, and J-Area.
The Eni-Ithaca combination has now been wrapped up, aiming to replicate the previous execution of upstream combinations that the Italian giant has formed using its satellite model, including Vår Energi in Norway and Azule Energy in Angola, as a strategic response to the challenges and opportunities of energy markets. The combination was funded by issuing new ordinary shares to Eni UK, representing around 38.7% of Ithaca’s enlarged issued share capital.
“The combination reaffirms the commitment of Eni in the UK, where it is engaged across the entire energy value chain (oil & gas upstream, renewables, CCS projects, potential future development of magnetic fusion projects). By combining two complementary portfolios, the transaction consolidates Eni’s upstream position in the country, where the company sees opportunities for value through growth and optimization,” highlighted the Italian giant.
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Furthermore, Eni underlines that this satellite model addresses the challenges and opportunities of energy markets, by creating focused and lean companies able to attract new capital to create value through operating and financial synergies and growth acceleration. The Italian player claims to be a fully committed, long-term, and supportive shareholder of Ithaca, which is now positioned as “the largest resource holder in the UK North Sea.”
With a diversified portfolio of production and development opportunities, the enlarged Ithaca is said to have the means to underpin material long-term organic growth, delivering the oil and gas deemed essential for energy security while supporting the UK’s decarbonization targets.
“With significant optionality across the portfolio, a strong track record in delivering value-accretive M&A and material financial firepower, the combined group will continue to be value-driven,