Investing.com -- Ithaca Energy (LON:ITH) shares surged over 9% on Wednesday after the company posted a stronger-than-expected $153 million net profit for 2024, reaffirmed its $500 million dividend, and projected sustained production growth following its acquisition of Eni S.p.A’s UK assets.
The company reported a net profit of $153.2 million, exceeding consensus estimates by 6%, despite being down from $292.6 million in 2023 due to higher tax charges, including the UK’s Energy Profits Levy.
Adjusted EBITDAX stood at $1.405 billion, compared to $1.723 billion in 2023, with net cash flow from operating activities at $853 million.
Ithaca’s total declared dividends for 2024 amounted to $500 million, representing a 16% yield, and the company reaffirmed its 2025 dividend target of $500 million, maintaining its policy of distributing 30% of post-tax cash flow from operations.
Jefferies pointed out that Ithaca’s production guidance for 2025, set between 105 and 115 kboe/d, reflects a 3% increase compared to their previous estimates.
The completion of Ithaca’s acquisition of Eni UK in October 2024 was a pivotal factor in the company’s growth, contributing to a pro forma production of 105.5 thousand barrels of oil equivalent per day (kboe/d) for the year, making Ithaca the second-largest independent producer in the UK Continental Shelf (UKCS).
Actual production for the year was 80.2 kboe/d, with fourth-quarter production reaching 116.0 kboe/d, peaking at 138 kboe/d. Looking ahead, the company projects full-year 2025 production between 105 and 115 kboe/d, with plans to sustain production above 100 kboe/d beyond 2025.
The company’s financial position was further strengthened by a successful $2.25 billion refinancing in October, which enhanced balance sheet flexibility and provided over $1 billion in available liquidity by year-end.
Net debt at the end of 2024 was $885 million, with a leverage ratio of 0.45x. "We enter 2025 in a position of greater strength, strategically, operationally, and financially," said executive chairman Yaniv Friedman in a statement, emphasizing the company’s focus on high-value growth opportunities and shareholder returns.
Operationally, Ithaca made significant advancements in key projects. The Rosebank development, one of the largest undeveloped fields in the UKCS, remains on track for first production in 2026/27.
The company also increased its stake in the Seagull field to 50% through the acquisition of JAPEX UK E&P Limited (JUK), reinforcing its strategy of North Sea consolidation.
Additionally, the Captain Enhanced Oil Recovery (EOR) Phase II project was completed on schedule and within budget, showing strong early results.
Ithaca remains committed to sustaining high production levels and optimizing its portfolio. The company expects net operating costs to range between $770 million and $850 million in 2025, with net capital expenditures projected at $560 million to $620 million, excluding the Rosebank project, which is expected to require $190 million to $230 million.
"With a potential for over $9 billion of total pre-tax cash flow from operations between 2025 and 2029 at $80/bbl and 85p/therm, we are well-positioned to play a pivotal role in further North Sea consolidation," Friedman added.
Jefferies analysts reiterated their "buy" rating on Ithaca Energy, citing its strong cash flow potential, substantial tax advantages, and well-executed M&A strategy.
They also said that the company’s financial strength positions it for further consolidation in the North Sea, a strategy that could enhance long-term shareholder value.