Aberdeen’s Ithaca buys Chevron North Sea for $2bn

Aberdeen-based oil and gas operator Ithaca Energy, owned by Israel’s Delek Group, said on Thursday it will acquire Chevron North Sea Limited (CNSL) for $2 billion.

The transaction will add 10 producing field interests to the existing Ithaca portfolio “resulting in an approximately 150% increase in the proven and probable (2P) reserves of Ithaca and a 300% increase in forecast 2019 production,” said the firm.

Analysts said the deal means Delek Group has moved closer to listing Ithaca Energy on the stock market.

Ithaca CEO Les Thomas said the deal, which he expects to close in September, would make it large enough for Delek to list Ithaca on the London stock exchange. 

“(Delek) are a long-term investor (and) very comfortable with having a majority ownership in a public vehicle,” Thomas told Reuters, adding there was no timeframe yet for a listing.

As part of the transaction, 500 employees will transfer to Ithaca.

“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,” said Ithaca.

“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 is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group Limited.

“The acquisition will be funded through an upsized $1.65 billion Reserve Based Lending (RBL) senior debt facility, a $700 million acquisition debt financing facility, an equity investment by Delek and existing cash resources of the company,” added Ithaca.

“Ithaca’s existing $300 million term loan and associated Delek guarantees will be retired as part of this refinancing.

“JP Morgan is acting as financial adviser to the company in relation to this transaction.

“The RBL facility has been fully underwritten by BNP Paribas and the acquisition debt financing has been jointly underwritten by JP Morgan and BNP Paribas.”

Ithaca CEO Thomas added: The acquisition of CNSL is a significant step forward in the long term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets.

“We are very pleased to be acquiring a high quality portfolio of assets and experienced operational organisation that fits well with our existing business. 

“Like our current portfolio, the production and reserves base is heavily weighted towards operated asset positions, which provides us with the ability to actively prioritise and unlock the full potential of the business.”

Delek Group CEO Asi Bartfeld added: “The acquisition is a key part of the Delek Group’s strategic focus on building a world class E&P business. 

“Acquiring CNSL accelerates implementation of that strategy and further strengthens the Group’s oil and gas business.

“We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.