LONDON: Ithaca Energy, a leading UK independent production and growth company, has signed a sale and purchase agreement to acquire the entire issued share capital of JAPEX UK E&P Limited (JUK) from Japan Petroleum Exploration Co. for an enterprise value of US$193 million based on an effective date of 1 January 2024.
JUK holds a 15% working interest (“WI”) in the Seagull oil field in the UK North Sea. The Transaction, which is subject to the satisfaction of certain conditions including regulatory approval, will increase Ithaca Energy’s WI in Seagull from 35% to 50%, equalling bp’s interest as the field operator.
The transaction is expected to add 7 mmboe of 2P reserves (as at 1 Jan 2025) and production of approximately 4 – 4.5 kboe/d in 2025, made up of approximately 82% liquids with the remainder gas. This Transaction is in line with the Group’s strategy to pursue value-accretive M&A, adding high-quality assets in its core UK Continental Shelf market.
The transaction consideration is subject to customary purchase price adjustments, equating to an estimated payment at completion of approximately US$140 million, assuming an illustrative 30 June 2025 closing date. The Transaction includes JUK’s material tax losses of approximately US$215 million in both Ring Fence Corporation Tax and Supplementary Charge Tax as well as approximately US$105 million Energy Profit Levy losses as at the effective date of 1 January 2024, reflecting JUK’s material investment in the field. The Transaction equates to a valuation of around $10/boe (excluding tax losses).
The Seagull oil field, located in the UK Central North Sea, with over 300 mmboe in place, represents a high margin producing field, developed as a subsea tie back to the bp-operated central processing facility (CPF) of the Eastern Trough Area Project (ETAP). Production started in November 2023 from the J1 well. J2 and J3 wells are now online with the fourth well, J4, due onstream in H2 2025. The field is expected to remain in production until the mid-2030s.
Yaniv Friedman, Executive Chairman, commented “Today’s announcement regarding the acquisition of JUK shows Ithaca Energy’s growth strategy in action with a highly accretive, easily digestible and synergistic deal that will add incremental production for the Group, in a well-understood, high-value field.”