Italy’s Eni takes 38.5% Ithaca stake in North Sea deal

Italian energy firm Eni S.p.A. announced that it has reached an agreement to merge “substantially all” of its upstream assets in the UK with Aberdeen-headquartered Ithaca Energy Plc “marking a strategic move to significantly strengthen its presence on the UK Continental Shelf.”

Ithaca, owned by Tel Aviv-listed Delek Group, said it agreed to buy nearly all of Eni’s UK-based oil and gas producing assets for about £754 million in Ithaca shares.

Delek will hold just over 50% of Ithaca when the deal closes. Eni will be entitled to nominate the next CEO of Ithaca.

Ithaca said the combined entity would be able to produce more than 100,000 barrels of oil equivalent per day until at least 2028 and aims to pay dividends of up to $500 million each in 2024 and 2025.

Ithaca will issue new shares to Eni, which will hold 38.5% of the enlarged share capital of Ithaca. Based on Tuesday’s closing share price, those shares are worth about £754 million.

Ithaca executive chairman Gilad Myerson said: “The transformational combination with Eni UK will further enhance Ithaca Energy’s position as a leading UKCS production and growth company, with positions in 6 of the 10 largest UKCS assets in the basin.

“The synergistic combination with Eni’s highly cash-generative UKCS portfolio has the ability to unlock our long-life organic growth opportunities creating a combined entity with substantial scale and longevity.

“With Eni as a significant, long-term and supportive shareholder, the enlarged group will benefit from increased financial strength to support the execution of our BUY, BUILD and BOOST strategy and gain access to Eni’s world-class technical capabilities and operational support.

“The combination will create a solid platform which can underpin material shareholder distributions, including an ambition to pay special dividends in 2024 and 2025, as well as future organic and inorganic growth.”

Eni said: “At completion, Eni will enter into a relationship agreement with Ithaca on substantially similar terms to the relationship between Delek and Ithaca Energy.

“This will entitle Eni, for so long as it directly or indirectly holds greater than 20% of the combined group’s issued share capital, the right to appoint two non-executive directors to the Ithaca board and for so long as it holds greater than 25% of the combined group’s issued share capital, to appoint one observer to the remuneration committee and the audit and risk committee; and appoint one director to the nomination and governance committee.

“From completion, it is anticipated that Eni will be entitled to recommend the nomination of the next proposed CEO of the combined group in accordance with the policies and processes of Ithaca’s nomination and governance committee.”

Eni CEO Claudio Descalzi said: “This agreement represents a further example of Eni adapting to the demands of the changing energy market and in this case deploying our successful Satellite Model.

“It affords the opportunity to build scale, realising efficient upstream growth and maximising value under a dedicated and focused management structure supported by Eni resources and expertise.

“The combination with Ithaca represents an exciting opportunity for us to bring together complementary portfolios establishing a material position on the UKCS with significant growth and optimisation opportunities.

“We have moved quickly after the acquisition by Eni of Neptune Energy to transform our competitive position in the UK and we see the opportunity for Eni and Ithaca to realise material long-term value in helping to address the key challenges of security, affordability and sustainability of energy supply.

“Indeed, establishing a leading position in the UK upstream market will mirror our equally strong position in CCS with our Hynet and Bacton Thames projects which together with 3 other CO2 storage licences gives us around 1Giga Tonn of gross storage capacity and will see us become a key player in the decarbonisation of the UK’s hard-to-abate industries.

“With our significant investment as a partner in the giant Dogger Bank offshore wind farm, Eni is pleased to be a major player across key activities in the UK’s energy sector.”