Ithaca Energy to Buy Summit E&P, as Sumitomo Exits UK's Upstream Oil & Gas Sector

London-listed oil and gas company Ithaca Energy said Thursday it had agreed to acquire Summit Exploration and Production Limited, a UK North Sea-focused oil company and a subsidiary of Japan's Sumitomo.

In the announcement of its financial results, Ithaca said that the agreement to acquire 100% of the share capital of Summit had been signed on February 28, 2022.

"The agreement has an economic date of January 1, 2021, and is subject to normal completion activities including consent from the North Sea Transition Authority," the company said without sharing the financial terms of the agreement.

Summit last year announced a strategic shift, with the aim to move away from fossil fuels and toward lower-carbon energy systems. The company last year said it would seek opportunities to become a significant player in the development of the UK’s new low carbon energy businesses in the 2020s and beyond.

Earlier this week, Summit confirmed its upstream oil and gas assets would be divested while a new sister company to SEPL has been established as a 100% subsidiary of Sumitomo Corporation – Summit Energy Evolution Ltd (“SEEL”).

The new entity – SEEL – will take over Summit's existing low-carbon energy businesses, including the leadership of the Bacton Energy Hub Supply SIG and participation in other Bacton SIGs.

"The aim is that SEEL will become the vehicle for Sumitomo Corporation’s future interests in hydrogen and other low carbon energy businesses in the UK, particularly those related to repurposing and decarbonization of existing oil and gas infrastructure, and utilization of Sumitomo’s and SEPL’s existing skills and experience in the subsurface, engineering, offshore and renewables technologies," Summit said.

"Sumitomo’s path to lower carbon energy will continue with the divestment of Summit Exploration and Production Limited, where a Sales and Purchase Agreement was signed on 28th February by Sumitomo Corporation and Ithaca Energy (UK). Ownership of SEPL will transfer to Ithaca on completion, including all upstream assets, but excluding activities related to low carbon energy systems. The deal is expected to be completed in Q2 2022," Summit said.

John Austin, CEO of Summit E&P Ltd, said: "Summit E&P has been refocusing its interest over the last two years, away from fossil fuels and towards the new low carbon energy systems which are rapidly developing in the UK. It is sad Sumitomo departs the UK upstream oil and gas sector after so long, but I am pleased to have delivered excellent returns to our shareholders consistently for many years. The establishment of our sister company Summit Energy Evolution will increase that focus, while retaining knowledge and experience from our UK offshore oil and gas heritage built up over the last 30 years."

"SEEL – the “new” Summit – will take a leading role in the development of new Hydrogen Energy systems in the UK, including Bacton, and will become an important component of establishing new long-term sustainable low carbon energy businesses for its shareholder Sumitomo Corporation, in line with corporate directives to achieve net zero by 2050."

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