Ithaca Energy plc (“Ithaca Energy” or the “Group”)
Agreement with Shell to market working interests in Cambo
Ithaca Energy (LON: ITH) is pleased to announce it has signed an agreement with Shell U.K. Limited (“Shell”) which defines a marketing process for Shell’s 30% working interest in Cambo.
The Cambo field is the second largest undeveloped oil and gas discovery in the UK North Sea, located in the West of Shetland region. The development provides Ithaca Energy with long term production growth at a low expected unit operating cost per barrel. With its modern, energy efficient design and potential for electrification, Cambo could be one of the lowest-emission intensity assets in the North Sea. The field is expected to produce at less than half the CO2 intensity than the average UK field, enabled by the FPSO design which includes features such as being fully electrification ready (subject to grid connection availability), zero routine flaring and the Sevan FPSO hull design reducing power demand.
To enable the successful progression of the project towards final investment decision (“FID”), a number of outcomes are possible under the agreement:
The agreement entered into between Shell and Ithaca Energy dated 4 May, provides an option for Shell to sell any remaining portion of its own stake (“Option Stake”), which is not sold to a third party to Ithaca Energy, following the conclusion of the marketing process, that will run six months from the date of signing the agreement. In parallel, Ithaca Energy has an option to acquire the Option Stake, in each case subject to regulatory approval.
The transaction structure provides upfront certainty to Ithaca Energy, with very limited near-term cash outflow, in the event that either Ithaca Energy or Shell exercise their options in relation to the Option Stake when the marketing process concludes.
In all sale scenarios, Ithaca Energy would retain at least a 50% working interest in Cambo and will remain the operator of the asset.
Alan Bruce, Chief Executive Officer, Ithaca Energy, commented: “Our agreement with Shell represents a meaningful step towards the development of Cambo, the second largest undeveloped field in the UKCS and a key asset in helping maintain the UK’s future energy security. Securing a new owner for Shell’s stake is an important step in Ithaca Energy progressing to Final Investment Decision. Ithaca Energy’s primary strategic focus is to maximise sustainable shareholder returns through the delivery of our BUY, BUILD and BOOST strategy, including the future development of Cambo.
Ithaca Energy remains committed to investing in the UK North Sea, however, the impact of the amended Energy Profit Levy and the fiscal instability it has created continues to constrain our ability to invest. We are actively engaging, in a constructive manner, with the UK government in pursuit of the fiscal stability required to make critical investment decisions that will support the UK’s long-term energy security.”
Shell’s Senior Vice President, UK Upstream, Simon Roddy, added: “Following an internal review, we have decided to sell our 30% working interest in Cambo and have agreed a process with Ithaca Energy for the sale of Shell’s stake in the field this year. We wish Ithaca Energy well in the future development of the field, which will be important to maintain the UK’s energy security and to sustaining domestic production of the fuels that people and businesses need.”
Kathryn Reid – Head of Investor Relations, Corporate Affairs & Communications
FTI Consulting (PR Advisers to Ithaca Energy)
+44 (0)203 727 1000
Ben Brewerton / Nick Hennis
About Ithaca Energy plc
Ithaca Energy is a leading UK independent exploration and production company focused on the UK North Sea with a strong track record of material value creation. In recent years, the Company has been focused on growing its portfolio of assets through both organic investment programmes and acquisitions and has seen a period of significant M&A driven growth centred upon two transformational acquisitions in recent years. Today, Ithaca Energy is one of the largest independent oil and gas companies in the United Kingdom Continental Shelf (the “UKCS”), ranking second by resources.
With stakes in six of the ten largest fields in the UKCS and two of UKCS’s largest pre-development fields, and with energy security currently being a key focus of the UK Government, the Group believes it can utilise its significant reserves and operational capabilities to play a key role in delivering security of domestic energy supply from the UKCS.
Ithaca Energy serves today’s needs for domestic energy through operating sustainably. The Group achieves this by harnessing Ithaca Energy’s deep operational expertise and innovative minds to collectively challenge the norm, continually seeking better ways to meet evolving demands.
Ithaca Energy’s commitment to delivering attractive and sustainable returns is supported by a well-defined emissions-reduction strategy with a target of achieving net zero by 2040.
Ithaca Energy plc was admitted to trading on the London Stock Exchange (LON: ITH) on 14 November 2022.