22nd Aug 2024 16:09
(Alliance News) - The cut to production guidance by Ithaca Energy PLC was a concern, analysts on Thursday said, with a risk that forecasts for 2025 could be lowered as well.
In the six months to June 30, the London-based oil and gas company operating in the North Sea said pretax profit fell 24% to USD189.4 million from from USD248.7 million a year prior. Revenue fell 33% to USD841.9 million from USD1.25 billion.
First half production was 53,046 barrels oil equivalent per day, down from 75,755 a year ago. This reflected the shut-in of the Pierce field for a large part of the period, coupled with outages at the Erskine, Captain and Schiehallion fields.
Full-year guidance for 2024 combined group production was cut to 76,000 to 81,000 boed, down from previous guidance of 80,000 to 87,000 boed.
Ithaca guided 2024 stand-alone production to 54,000 to 57,000 boed, down from 56,000 to 61,000.
The firm declared a first interim dividend of 98.6 US cents per share, worth USD100 million in total. Ithaca also reaffirmed a dividend commitment of 30% post-tax cash flow from operations, with an ambition for special dividends to increase total distributions to up to USD500 million per annum.
In addition, Ithaca said it was targeting completion of Eni SpA's UK upstream oil and gas assets early in the fourth quarter. The deal was announced in April.
Ithaca said the combination enhances the balance sheet and provides material firepower for growth and a potential pathway to investment grade credit rating.
Stifel said the results show "poor operational delivery" in the second quarter with 2024 production guidance cut, due to issues across both the operated and non-operated portfolio.
While the cash impact is expected to be limited in 2024 due to lower cash tax payments, the broker sees a risk that 2025 production forecasts have to be reduced.
Panmure LIberum noted the key development in the period was the agreement to acquire Eni SpA's UK business.
But it highlighted difficulties in closing the deal which lie around the low liquidity and free float in Ithaca stock, with majority-owner Delek having to place out a large number of shares just to maintain the free float.
The broker said Eni could be left with a large amount of Ithaca paper which could create a overhang and potential drag on the shares in the coming months.
Overall, the broker said: "The results were a miss [versus] consensus, and the downgrade to guidance is a concern, although the ability to close the deal arguably remains a bigger concern."
Shares in Ithaca eased 4.1% to 125.60 pence in London on Thursday.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Ithaca Energy