Aberdeen's Ithaca benefits from rise in oil and gas prices

North Sea focused Ithaca Energy has posted a $1 billion (£0.75bn) annual profit which underlines the scale of the boost provided to firms by the recent dramatic rises in the prices of oil and gas.

The Israeli-owned firm said underlying profits increased by 40 per cent last year “in view of the sharp increase in oil and gas prices”.

The effect of the increase was more than enough to offset the impact of a fall in production last year, during which Ithaca completed maintenance work that had been postponed in 2020 amid the pandemic.

The parent Delek Group noted that experts valued Ithaca at $3.1bn at December 31, following the rise in prices, against $1.9bn at the start of last year.

Describing 2021 as an excellent year for Delek, chief executive Idan Wallace said the group intends to use the “historic momentum in the global energy markets” to support a strategy under which it will strengthen core assets such as Ithaca.

Delek also has oil and gas operations in the Mediterranean region.

While environmental campaigners have stepped up demands for oil and gas activity to be curbed in the North Sea, Delek recently made clear that it regards the basin as an attractive one in which to invest.

In November it agreed to buy the UK North Sea business developed by Japan’s Marubeni for up to $365m.

Delek said the deal “joined the series of significant steps taken by the Company as part of its strategy to expand and develop its operations in the Northern Sea in the UK”.

 Ithaca last year won regulatory approval for a £400m plan to boost production from the Captain field. It expects to start production from the Abigail field this year.

Delek has suggested it may float Ithaca on the London and Tel Aviv stock exchanges. A flotation could allow Delek to realise some of the increase in the value of the investment it has made in the North Sea. The group moved into the North Sea through the acquisition of Ithaca in 2017 in a £1bn deal. It acquired a $2bn North Sea portfolio from America’s Chevron in 2019.

Rishi Sunak has resisted calls for him to impose a windfall tax on firms operating in the North Sea following the rise in oil and gas prices. This has left consumers facing big increases in their bills.

Ithaca made $1.04bn profit before interest, tax depreciation, amortisation and exploration expenses in 2021, against $0.75bn in the preceding year. It made $400m profit before tax last year after losing $286m in 2020.