In a launch posted on its web site this week, Ithaca Power introduced that it has signed a sale and buy settlement to accumulate a further 46.25 % stake within the Cygnus fuel discipline from Spirit Power for a purchase order value of GBP 116 million ($155.8 million).
The deal is predicated on an efficient date of January 1, 2025, and is topic to North Sea Transition Authority (NSTA) consent, Ithaca highlighted within the launch, including that the transaction will improve Ithaca Power’s operated curiosity in Cygnus to 85 %.
Ithaca famous within the launch that the deal is anticipated so as to add 23 million barrels of oil equal of 2P reserves, as at January 1, 2025, and professional forma manufacturing between 12.5 – 13.5 thousand barrels of oil equal per day in 2025.
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“This transaction is consistent with the group’s technique to pursue value-accretive M&A, including high-quality belongings in our core UK Continental Shelf market,” Ithaca mentioned within the launch.
“The transaction equates to a valuation of lower than $7 per barrel of oil equal on 2P Reserves, which we consider is sweet worth for fairness in a producing discipline that we all know and perceive,” the corporate added.
Within the launch, Ithaca’s Govt Chairman Yaniv Friedman mentioned, “[this] transaction with Spirit Power gives additional fairness in a high-margin, high-quality producing fuel asset that we perceive deeply by way of our operatorship”.
“This deal follows our Japex (Seagull) deal introduced simply two months in the past and additional demonstrates our development technique in motion. By growing our stake in Cygnus we add incremental reserves and manufacturing to our portfolio at enticing valuation metrics that ticks all of our funding standards, with out including any complexity,” Friedman added.
“We additionally see vital upside potential by way of additional infill drilling past the following three authorized wells. That is the kind of offers we like,” Friedman continued.
In its launch, Ithaca famous that Cygnus is the most important UK Continental Shelf fuel discipline and a key contributor to the UK’s vitality safety. The corporate identified that manufacturing began in 2016, “with 11 wells at present producing, with three additional infill wells authorized, with the Valaris Norway on location with the primary of the 2 agency wells to be spud in Q2 2025, and anticipated onstream throughout H2 2025 and H1 2026”.
In a press release posted on its website this week, Centrica plc introduced that subsidiaries of Spirit Power Restricted have entered into agreements to promote a 46.25 % curiosity within the Cygnus fuel discipline to a subsidiary of Ithaca Power plc.
Centrica famous in that assertion that the entire worth of the transaction to Spirit Power is roughly GBP 215 million ($288.8 million), “together with headline consideration of GBP 116 million and the switch of GBP 99 million ($132.9 million) of decommissioning liabilities related to the curiosity”.
Centrica mentioned within the assertion that its 69 % share of headline consideration is anticipated to be GBP 80 million ($107.4 million). The corporate famous that the deal is anticipated to finish in the course of the second half of 2025, “with customary interim interval changes to be utilized”.
“The transaction is strongly aligned with Centrica and Spirit Power’s technique to maximise worth from Spirit’s remaining reserves, delivering enticing upfront money consideration, and gives additional worth by transferring long-term liabilities,” Centrica mentioned within the assertion.
“As an current shareholder and the operator of Cygnus, Ithaca Power is ideally positioned to tackle majority possession of the asset,” it added.
In its assertion, Centrica famous that, following completion of the transaction, Spirit Power “will stay centered on the event of the long-term Morecambe Internet Zero carbon storage venture, its remaining producing belongings, and safely and effectively decommissioning its amenities and wells with minimal environmental impression”.
The corporate highlighted within the assertion that Spirit Power’s 2P reserves shall be diminished by 19.4 million barrels of oil equal to mirror the curiosity disposed.
Chris O’Shea, Group Chief Govt of Centrica and Chairman of Spirit Power, mentioned within the assertion, “our focus is on delivering worth for Centrica’s colleagues, clients and shareholders by way of the vitality transition”.
“Via this disposal we’re taking one other step in lowering our publicity to fuel manufacturing whereas accelerating the supply of enhanced worth to shareholders, permitting the Spirit workforce to additional give attention to delivering the most important carbon storage venture in Europe at Morecambe Internet Zero,” he added.
“This is just one of many thrilling alternatives throughout Centrica, aligned to the vitality transition, as we proceed to re-position our infrastructure portfolio, and we stay firmly centered on capturing the immense worth on supply,” he continued.
To contact the creator, e mail andreas.exarheas@rigzone.com
