Shares in Ithaca Energy (LON:ITH) gained further ground after the North Sea oil and gas producer announced the US$1.1 billion acquisition of a portfolio of offshore oil assets from Suncor Energy (TSE:SU).
Ithaca said the acquisition marks its first international deal, establishing a presence in eastern Canada. Furthermore, it provides a platform for further deals and will enable the company to build further scale across North America.
For the uninitiated, Ithaca Energy is one of the UK North Sea’s largest independent oil and gas producers. In recent years, Ithaca has been focused on growing its asset portfolio organically and via transformational acquisitions, including a recent business combination with Eni UK.
Production guidance upgrade
The acquired assets are located in shallow waters off the east coast of Newfoundland and Labrador, Canada.
They comprise a 48% operated working interest in Terra Nova, a 40% non-operated interest in the White Rose Existing Lands, and a 38.6% non-operated interest in the White Rose Growth Lands, including the West White Rose Extension.
Forecasts for Ithaca Energy
| Year to December | FY25A | FY26E | FY27E |
| Revenue ($m) | 2,947 | 3,619 | 3,509 |
| Net profit ($m) | (84.1) | 468 | 451 |
| Dividend per share (c) | 30.4 | 31 | 30.9 |
Source: Stockopedia
Ithaca will pay US$860 million in cash up front, and the deal includes an additional contingent payment of up to $250 million tied to future oil prices.
The acquisition supports an upgrade of Ithaca’s medium-term production outlook to between 140 and 150 barrels of oil equivalent per day.
Next era of growth
Executive chairman Yaniv Friedman insisted: ‘This acquisition marks the next era of growth for Ithaca Energy as we make our inaugural international acquisition in Offshore East Coast Canada.’
Friedman added: ‘The transaction delivers on our clear stated growth strategy as we seek to diversify and grow our production and resource base and replicate our success in the United Kingdom Continental Shelf (UKCS) through disciplined international expansion in regions we believe we can create long-term value for our shareholders.’
Ithaca’s shares have surged more than 40% higher over the past year on the strength of Brent crude. This move propelled Ithaca into the FTSE 100 last month, a promotion that reflected the firm’s rising market value and increasingly prominent position in the UK energy sector.
The Canadian oil assets deal looks compelling to us, providing a platform for further M&A in North America and ‘materially’ enhancing Ithaca’s medium-term production guidance.
Income investors should also note that Friedman expects the acquisition will deliver ‘immediate cash flow and dividend accretion’ to Ithaca.
