Ithaca Energy Expands its Portfolio with Acquisition of JAPEX UK E&P
Ithaca Energy, a prominent North Sea oil and gas operator and producer, has made a strategic move to acquire JAPEX UK E&P (JUK) from Japan Petroleum Exploration (JAPEX), enhancing its interest in a key BP-operated oil field on the UK Continental Shelf (UKCS).
The acquisition, facilitated through a sale and purchase agreement (SPA), involves acquiring the entire issued share capital of JUK for an enterprise value of $193 million, effective from January 1, 2024. This acquisition will boost Ithaca’s stake in the Seagull oil field from 35% to 50%, aligning it with BP’s interest as the field operator.
Expected to add 7 million barrels of oil equivalent (mmboe) of 2P reserves and a production capacity of approximately 4 – 4.5 thousand barrels of oil equivalent per day (kboe/d) in 2025, the transaction aligns with Ithaca’s strategy to pursue value-accretive merger and acquisition opportunities within the UKCS market.
This acquisition will enable Ithaca to leverage JUK’s significant tax losses, enhancing its financial position and unlocking additional value from the Seagull oil field. Yaniv Friedman, Ithaca’s Executive Chairman, expressed optimism about the acquisition, citing its accretive nature and synergy with the company’s growth strategy.
The Seagull oil field, situated in the UK Central North Sea, boasts over 300 mmboe in reserves and is characterized by high margins. The field, developed as a subsea tie-back to the BP-operated Central Processing Facility (CPF) of the Eastern Trough Area Project (ETAP), commenced production in November 2023 and is expected to continue operating until the mid-2030s.
Following this acquisition, Ithaca Energy solidifies its position as a key player in the UK oil and gas sector, with the potential to surpass competitors and emerge as a leading producer on the UKCS. This strategic move comes amidst a shifting landscape in the offshore energy industry, marked by fiscal and regulatory uncertainties.
As industry players adapt to changing dynamics, organizations like Offshore Energies UK (OEUK) emphasize the importance of addressing uncertainties to retain investor confidence and prevent the potential migration of business opportunities to other countries.
In conclusion, Ithaca Energy’s acquisition of JAPEX UK E&P marks a significant milestone in the company’s growth journey, positioning it for sustained success in the competitive UKCS market.