The deal will add ten producing field interests to Ithaca’s existing portfolio, which amounts to an approximate 300% increase in the company’s forecast 2019 production and a 150% increase in its proven and provable (2P) reserves.
Following the completion of the transaction, Ithaca’s asset base will consist of an estimated approximately 225 million barrels of oil equivalent (MMboe) in 2P reserves and an additional 45 MMboe of 2P contingent resources associated with drilling opportunities and near-field developments. The company’s expanded portfolio, consisting of 18 producing field interests, is forecast to deliver approximately 80,000 barrels of oil equivalent per day (boepd).
As part of the transaction approximately 500 employees will transfer to Ithaca Energy, with 200 of those employees working on offshore assets.
In a statement, Ithaca Energy said: “With the addition of the high-quality, long-life assets that characterise the CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of the Company and establishes Ithaca as the second largest independent oil and gas producer in the UK North Sea.
“The transaction provides a material step up in the scale and breadth of the Company’s producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cashflows of the business and enables accelerated monetisation of Ithaca’s existing $2.2 billion of UK tax allowances.”
Ithaca Energy is a wholly owned subsidiary of Delek Group, who first announced its bid to acquire Chevron’s North Sea assets in April 2019.
Delek Group CEO Asi Bartfeld said: “The acquisition is a key part of the Delek Group’s strategic focus on building a world class E&P business. Acquiring CNSL accelerates implementation of that strategy and further strengthens the Group’s oil and gas business.
“We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets.”
Ithaca Energy CEO Les Thomas said: “The acquisition of CNSL is a significant step forward in the long term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets.
“We are very pleased to be acquiring a high-quality portfolio of assets and experienced operational organisation that fits well with our existing business. Like our current portfolio, the production and reserves base is heavily weighted towards operated asset positions, which provides us with the ability to actively prioritise and unlock the full potential of the business.”
The transaction has an effective date of 1 January 2019 and is expected to be completed around the end of the third quarter of 2019, subject to approval of the acquisition by the UK Oil and Gas Authority.