Ithaca Energy Oil Production Exceeds Expectations Amid Windfall Tax Challenges

Oil production targets were surpassed by Ithaca Energy last year, reaching an impressive average of 80200 barrels per day. This achievement marks a significant increase from 70200 barrels per day in 2023, bolstered by a six-month contribution from the UK assets of Eni, acquired in a substantial £750 million deal.

Pre-tax profits for the expanded FTSE 250 group grew to $334 million, up from $302 million the previous year. The financial gains largely stemmed from a reduction in impairments associated with lower-than-expected oil and gas prices. The company’s performance highlights its adaptation to challenging market conditions.

The energy profits levy has posed considerable challenges for North Sea producers since its introduction. Originally established by Boris Johnson in 2022, the levy was increased from 35 per cent to 38 per cent in October, bringing the total tax rate on North Sea oil and gas profits to a staggering 78 per cent. This change is expected to cost Ithaca Energy approximately $210 million for the last year.

The company is well positioned for continued growth and potential consolidation within the North Sea sector. Executives believe that more acquisitions may be necessary to navigate the impacts of the windfall tax and strengthen its market presence.

Challenges have emerged for Ithaca’s ambitions as the Scottish courts recently quashed consent for the Rosebank project, one of the largest untapped oil fields in UK waters. The decision follows a legal challenge by environmental campaign groups, necessitating a reapplication for government permission due to newly established emissions guidelines.

Looking ahead, Ithaca Energy anticipates its output for the current year to range between 105000 and 115000 barrels per day. This projection reflects a full year of contributions from the Eni UK assets, driving investor confidence and optimism for future growth.