UK-based Ithaca Energy has recently announced a significant acquisition in the oil and gas sector. The company has signed a sale and purchase agreement to acquire the complete issued share capital of JAPEX UK (JUK) E&P from Japan Petroleum Exploration.
This strategic transaction, valued at $193 million (£149.5 million) enterprise value as of 1 January 2024, will boost Ithaca Energy’s working interest in the Seagull oilfield in the UK North Sea from 35% to 50%. This increase will align Ithaca Energy’s stake with bp’s interest, the field operator.
The acquisition is subject to regulatory approval and other conditions. It is expected to bring in seven million barrels of oil equivalent (mboe) of 2P (proven) reserves as of 1 January 2025 and increase production by approximately 4,000–4,500 barrels of oil equivalent per day in 2025. The production mix will consist of 82% liquids and the rest gas.
Ithaca Energy’s strategy of enhancing its portfolio through value-enhancing mergers and acquisitions is evident in this deal. The company aims to incorporate “high-quality” assets within its primary UK Continental Shelf (UKCS) market.
The deal structure includes purchase price adjustments, with an estimated payment of around $140 million at completion, based on a projected closing date of 30 June 2025. Additionally, the acquisition encompasses JUK’s significant tax losses, including approximately $215 million in Ring Fence Corporation Tax and Supplementary Charge Tax, along with around $105 million of Energy Profit Levy losses as of the effective date of 1 January 2024.
Ithaca Energy’s executive chairman, Yaniv Friedman, expressed enthusiasm about the acquisition, stating that it demonstrates the company’s growth strategy in action. The deal is seen as highly accretive, easily digestible, and synergistic, adding incremental production in a well-understood, high-value field.
The Seagull oilfield, situated in the UK central North Sea, is estimated to hold reserves exceeding 300mboe. This high-margin producing field is developed as a subsea tie-back to a bp-operated central processing facility at the Eastern Trough Area Project.
Production at the Seagull oilfield commenced in November 2023 from the J1 well, with J2 and J3 wells also online. The fourth well, J4, is expected to start production in the second half of 2025, with operations projected to continue until the mid-2030s.
In conclusion, the acquisition of JUK by Ithaca Energy marks a significant milestone for the company’s growth strategy and expansion in the UK North Sea oil and gas sector. This move aligns with Ithaca Energy’s commitment to enhancing its asset portfolio and maximizing value for its stakeholders.
