LNG

Italian energy company Eni has reached an agreement on the combination of substantially all of its upstream assets in the UK with Ithaca Energy to significantly strengthen its presence on the Continental Shelf of the UK, a significant LNG importer.

Eni is one of the most dynamic oil and gas exploration and production companies that has brought transformational energy resources through gas discoveries and development of existing fields offshore nation like Mozambique and Egypt and in others in Asia.

Under the terms of the business combination agreement Eni and Ithaca will combine the Eni UK Business with the existing Ithaca business.

The combination is being funded through the issue to Eni UK of a number of new ordinary shares that represents 38.5 percent of the enlarged issued share capital of Ithaca.

The economic effective date for the combination will be 30 June 2024, with completion expected in the third quarter.

Ithaca is one of the largest independent oil and gas companies on the UKCS, with a substantial resource base and playing a key role in energy supply security in the region, with stakes in six of the 10 largest fields and the top two largest development fields on the UKCS.

Stronger group

“The combination will immediately create an enlarged and stronger group with 2024 production greater than 100,000 barrels of oil equivalent per day and the underlying potential to organically grow to 150,000 boepd by the early 2030s,” said Eni.

“The combination is aimed at replicating the previous successful execution of upstream combinations that Eni has formed using its distinctive Satellite Model including Vår Energi in Norway and Azule Energy in Angola,” the Milan-based company explained.

“The Satellite Model is a strategic response to the challenges and opportunities of energy markets, creating focused and lean companies able to attract new capital to create value through operating and financial synergies and the acceleration of growth,” said Eni.

With this approach Eni said it would thereby strengthen its commitment to the UK after its previous acquisition Neptune Energy.

Eni concluded an agreed acquisition for $4.9 billion of UK-based Neptune in June 2023, gaining key global LNG stakes and gas field assets in Algeria, Indonesia, Norway, the UK, the Netherlands and Australia.

Under the terms of the takeover, Eni purchased Neptune for $2.6Bln and Eni’s Norwegian-listed subsidiary Vår Energi agreed to pay $2.3Bln to acquire Neptune’s operations in Norway.

Changing market

“This agreement represents a further example of Eni adapting to the demands of the changing energy market and in this case deploying our successful Satellite Model,” said Eni Chief Executive Claudio Descalzi.

“It affords the opportunity to build scale, realising efficient upstream growth and maximising value under a dedicated and focused management structure supported by Eni resources and expertise,” Descalzi added.

“We have moved quickly after the acquisition by Eni of Neptune Energy to transform our competitive position in the UK and we see the opportunity for Eni and Ithaca to realise material long-term value in helping to address the key challenges of security, affordability and sustainability of energy supply,” the CEO stated.

Delek Group, whose stakes in the offshore Leviathan and Tamar natural gas fields in the East Mediterranean make it a major supplier to Israel, Egypt and Jordan, posted a quarterly net loss as it prepares to welcome new partner Chevron and a possible LNG project after the US major’s agreed acquisition of Noble Energy.

The Tamar and Leviathan fields in Israeli territorial water have combined reserves of around 30 trillion cubic feet of gas

Delek Group said it ended second quarter with a net loss of 326 million Israeli shekels ($97M), mainly arising from one-time accounting provisions.

Delek said the drop in energy prices and the lockdowns applied in Israel and around the world, the group’s revenues in the quarter were 1.94 billion shekels ($577M), similar to the corresponding quarter last year, driven by a sharp rise in the Group’s revenues from core operations offshore Israel and in the North Sea.

The group’s Delek Drilling subsidiary holds the natural gas stakes and it completed the refinancing of the Leviathan field with a $2.25 billion loan.

Delek Drilling has noted that in recent weeks, after the reporting period, there had been a “significant increase” in demand for natural gas.

Revenues from the sale of gas in Israel net of royalties rose by 64 percent in the second quarter to 498 million shekels ($148M) compared with revenues of 304M shekels in the same three months of 2019.

“The increase was mainly due to the start of gas production from Leviathan, and the sales to the local market as well as exports to Egypt and Jordan,” said Delek.

The major increase in sales of natural gas and condensate led to a growth in operating profit before one-time provisions were made.

Chevron agreed in July 2020 to acquire Houston-based Noble Energy and its assets in US shale basins and the East Med, including the Leviathan and Tamar fields.

The definitive agreement valued at $5Bln between Chevron and Noble has been approved by both boards and is expected to close in the fourth quarter.

Delek Drilling has said the acquisition could mean the development of LNG export project.

“Chevron brings a significant LNG capability into the Leviathan project,” the Israeli company said at the time.

Delek also runs a UK North Sea oil and gas business through its subsidiary Ithaca Energy.

The Israeli company said Ithaca’s revenues in the quarter were 971M shekels ($290M) compared with revenues of 350M shekels in the parallel quarter last year.

Delek said average daily output by Ithaca amounted to 70,400 barrels of oil equivalent per day compared with 15,200 boe/d in the same quarter of 2019.

Delek had acquired the North Sea fields from new East Med partner Chevron.

The company’s provisions in the earnings came in relation to the disposal of two subsidiaries, Cohen Development and Phoenix.

As the quarterly results were announced, Delek noted that Bill Dunnett had been appointed as CEO of Ithaca.

Dunnett, an engineer by training, has 35 years of experience in the field of energy and gas, during which time he served as CEO of Repsol Sinopec Resources UK and in a range of senior positions in leading energy companies, including Shell, Petrofac and Halliburton.

“Delek Group’s core operations continued to demonstrate strong performance in the second quarter,” said Idan Wallace, President and Chief Executive of Delek Group.

“Major steps to strengthen both capital and collateral that the company completed during and following the reporting period, provide a tailwind to continue with the successful implementation of the Group’s strategy,” he added.

Delek Group, a stake holder in the East Mediterranean Tamar and Leviathan natural gas fields supplying Egypt, Israel and Jordan increased revenues by 88 percent and boosted operating income.

Delek Group, the Israeli company with key East Mediterranean natural gas assets, said the Leviathan gas field offshore Israel was regularly producing high volumes for export to Egypt and Jordan and planned to boost the flow amid regional advances in LNG projects.

Delek Group of Israel, the company with stakes in the huge Leviathan field in the Eastern Mediterranean set to come on stream to supply Egypt and regional buyers and with LNG output plans, said its Ithaca Energy subsidiary completed the purchase of the UK North Sea oil and natural gas assets from Chevron Corp. for around $2 billion.

Delek Group of Israel, the company with stakes in the giant Leviathan field in the Eastern Mediterranean set to come on stream in 2020, said it was one of the bidders for UK North Sea oil and natural gas assets being sold by Chevron Corp. of the US.