Earnings call transcript: Ithaca Energy’s Q1 2025 Production Hits Record

Ithaca Energy reported a record production level in its Q1 2025 earnings call, with a notable increase in production efficiency and a strong financial performance. According to InvestingPro, the company maintains a FAIR overall financial health score of 1.96, with particularly strong performance in growth metrics. Despite the absence of specific earnings per share (EPS) and revenue forecast data, the company’s operational achievements and strategic initiatives have drawn attention. The stock saw a modest increase, reflecting investor optimism about the company’s future prospects.

Key Takeaways

• Record quarterly production of 127,004 barrels per day.
• Adjusted EBITDAX reached $653.2 million.
• Liquidity remains strong with over $1.1 billion available.
• Zero safety incidents and improved production efficiency.
• Revised 2025 production guidance set at 109,000-119,000 barrels per day.

Company Performance

Ithaca Energy’s Q1 2025 performance was marked by record production levels and significant improvements in operational efficiency. The company reported a production efficiency of 97% at its Cygnus field, surpassing the basin average of 75%. The company’s focus on high-margin, low-emission assets aligns with industry trends, as it continues to enhance its competitive position in the UK Continental Shelf.

Financial Highlights

• Adjusted EBITDAX: $653.2 million
• Net cash from operations: $45 million
• Liquidity: Over $1.1 billion
• Pro forma leverage: 0.38x
• One-time non-cash deferred tax charge: $327 million

Market Reaction

Ithaca Energy’s stock currently trades at $0.69, showing recent volatility with a -3.2% decline over the past week and a significant -36.37% return over the last six months. Based on InvestingPro analysis, the stock appears to be undervalued compared to its Fair Value estimate. The company’s beta of 0.63 indicates lower volatility relative to the broader market, while trading within a 52-week range of $0.49 to $1.80.

Outlook & Guidance

The company revised its 2025 production guidance to 109,000-119,000 barrels per day, with an expected production exit rate of 135,000 barrels per day by the end of 2025. Ithaca Energy remains committed to a $500 million dividend target and continues to focus on mergers and acquisitions in high-quality assets. According to InvestingPro, which provides comprehensive analysis of over 1,400 stocks, the company’s next earnings report is expected on August 6, 2025, offering investors a crucial opportunity to evaluate its progress toward these targets.

Executive Commentary

Yaniv Friedman, an executive at Ithaca Energy, highlighted the company’s record quarterly production and EBITDAX performance, emphasizing the strategic focus on operational excellence. Luciano Vazquez noted the importance of safety and environmental responsibility, stating, "A perfect day is a day in which we do not register any safety or environmental event."

Risks and Challenges

• Potential changes in fiscal policy could impact operations.
• Volatility in oil prices may affect financial performance.
• The integration of acquisitions poses operational challenges.
• Market consolidation trends may increase competition.
• Environmental regulations could impose additional compliance costs.

Q&A

During the earnings call, analysts inquired about Ithaca Energy’s M&A strategy, which focuses on value and known assets. The company’s dividend policy was also discussed, with executives explaining that 30% of post-tax cash from operations would be allocated to dividends. Additionally, the call addressed production performance across different fields, highlighting the company’s operational strengths.

Full transcript - Ithaca Energy PLC (ITH) Q1 2025:

Sami, Call Coordinator: Hello, everyone, and thank you for joining the Ithaca Energy plc Q1 twenty twenty five Results Investors and Analyst Webcast. My name is Sami, and I’ll be coordinating your call today. I’ll now hand over to your host, Yaniv Friedman, Executive Chairman, to begin.

Please go ahead, Yaniv.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thank you, Sami. Good morning, everyone. Thank you for joining Q1 twenty twenty five results. Before we jump into the results, as you you can see, at first slide of our presentation, you can see our Cygnus Bravo project. We’re going to show off a little bit of Cygnus today.

We’ve announced yesterday an acquisition that’s going to take our stake to 85% and obviously, operatorship Cygnus. So we’re proud of this project and the efficiency of this project. So we’ll talk about it later. Let’s move to the next slide. Here with me today are Luciano Vazquez, our Chief Executive Officer Ian Lewis, our Chief Financial Officer.

Next slide, we’ll cover Q1 twenty twenty five highlights, strategic and operational highlights, financial overview, and we’ll obviously open for questions. We can jump to slides ahead to the Q1 twenty twenty five highlights. And I think bottom line is that this is a record quarter for us. Our parameters reaffirming and upgrading guidance for acquisition announcement yesterday. But if we’ll go into the details, and Ian will touch on the more financial aspects of this later, record quarterly production and EBITDAX performance with over 147,000 barrels all equivalent a day of production, supporting our full year 2025 production guidance.

On safety, very proud. We have zero incidents. We’re focusing on perfect day, delivering improved production efficiency, safety and environmental performance, and Luciano will speak to that later. Record quarterly adjusted EBITDAX, six and fifty three point two million, and this is really supported by reduction in OpEx per barrel. We’re spending a lot of time and effort on reducing costs and not less important delivering strategic priorities and return to our shareholders.

So we’re optimizing our business. We have material activity across our portfolio, sustain and optimize production, including drilling campaigns at Captain and Cygnus. And we’re consolidating. So we’re executing on our strategy. We’ve announced two acquisitions in the past two months, the Japx UK and the Spirit ownership in Cygnus.

On pro form a basis, we’re going to add about 17,000, 18 thousand barrels of oil equivalent per day through these acquisitions in 2025. And we’re committed to delivering attractive shareholders’ return demonstrated with our third interim dividend that we paid that was paid in April and reaffirming our dividend commitment for 2025. Next slide, please. So speaking about guidance. So following completion of the Japax UK acquisition and the additional 46.25% stake in Cygnus, we do expect the production exit rate at the end of twenty twenty five that could reach around 135,000 barrels per day.

If you look at the left side of the slide, so that’s our 2025 guidance that we gave in our Capital Markets Day in March. And if you look at the right side, what you could see is really a revised guidance to take into account the Cygnus acquisition. So 109,000 to 119,000 barrels per day production would increase by $10,000,000 the net OpEx range, 20,000,000 the net producing asset CapEx, no change into Rosebank, and we’re reaffirming our target dividend at $500,000,000 Next slide. So we’ll talk a bit about strategic and operational highlights, and Luciano will join me in this. But I think first and foremost, we’re investing.

And when I say investing, it’s not always monetary. It’s really sometimes just attention and internal resource that we have in looking at efficiency improvements and targeting infrastructure opportunities that offer a high return and short payback periods. If you’re looking at our Q1 highlights, so perfect day, we’ll talk about that. We’re not going to sing, I promise, but we’re going to talk about that and production efficiency performance. We did some rapid turnarounds of tieback opportunities that are delivering near term barrels and program of infill drilling across multiple assets ongoing and supporting our production outlook.

If we move to the next slide, record quarter of production in Q1 of twenty twenty five. Average production 127,004 barrels per day, confirming the enhanced operating capacity of the Grupo’s combination, but also demonstrate the focus that we have on levels of efficiencies across our portfolio. New wells and Eora Phase two performing ahead of expectation at Kapton and the J area tieback developments. So all of this production supports reaffirmed and upgrade our full year 2025 guidance, also for the asset additions that we had. And as you know, we are just ahead of our summer shutdown maintenance period.

So that gives you a really, really good picture of how we’re managing production these days. I’ll hand over to Luciano for the next slide to speak about the perfect days.

Luciano Vazquez, Chief Executive Officer, Ithaca Energy: All right, and good morning everybody. Thanks for being here. Well, two of the key elements that have allowed us to achieve this performance in Q1 are fundamentally method and focus. This is what we have behind what we call the perfect day. A perfect day is a day in which we do not register any safety or environmental event and we make or we exceed our expected production on that day.

Now focus because we achieve it by making the daily results visible to the entire workforce. So it makes the team realize how important it is what they do and they contribute to the objective that we have in mind. And of course, it directs their minds and they’re also their pride. And method because of what lies behind it, that is the attention to its components, that is production efficiency, the core is identifying improvement action, implementing them and measuring the results. I’ll talk about it a little bit later.

But what we do, we break down the perfect day to the asset level. So everybody can take even more recognition of their achievement. And now as a result, we had seven out of our 10 operated assets, which not only had a perfect day, they had a perfect quarter. That means the entire period throughout the thirty days, the ninety days of the first quarter were perfect days. And we can go to the next slide.

Now, a perfect day can only be such if it is incident free. And again, this is achieved with the greatest attention and continuous improvement. And we are never satisfied unless we zero all our HSC metric, but we are clearly moving into the right direction as you can tell. Now, the basis of it is HSC leadership, personal responsibility, but also, and this is a team very important after business combination, simplification, standardization, effective system, all that can be achieved with a unified company. And so we can drive further improvements in HSE performance.

Now this quarter we have celebrated a twenty second year LTI free in Erskine. And as you can tell, we’ve more than halved our total recordable incident frequency in eighteen months, which is not easy to achieve. So the trend is dramatically going direction. Again, we can only be pleased if when we get to zero, but that is the right direction of travel. On the emission side of things, we are also proving again the quality of the combined portfolio.

We recorded the record low emission with 15.5 kilogram per BOE of CO2 emission down from a pro form a of 19.1 in 2024. And keep in mind, this compares to the average in the basin, which is around 25 kilogram per BOE and growing. So direction. We can go to the next slide now and talk about in fact the improved operational performance. So how do we achieve the best production production efficiency.

It’s not a coincident clearly that HSE performances and operational performance are all going hand in hand because once you improve, you improve all across the board. Now, as I said earlier, this is about a structured method, which is the tool at the basis of the improvement. For us, this means fundamentally three things. We focus on three different areas in three different ways. One area is the unplanned downtime, where we identify the weakest link, what we call the bad actors and look at preventive action to enhance their reliability.

The second area is the planned downtime, where we look at ways to reduce the execution time of the maintenance interventions and the turnaround maintenance. And then a third area, which is the locked in potential, where we look at ways to improve the performance of each single system from the reservoir to wells to facilities. So the combination of this eventually brings us to have the results that observed in Q1 twenty twenty, Q1 this year. So we are able to continue the improvement trend already observed in Q4 twenty twenty four. And of course, we have some points of excellence like the Cygnus one we will talk about, which had a record production efficiency of 97% in Q1.

Now as a reference, again, you look at the entire basin of the UKCS, it is at around 75% of production efficiency. So we are moving in a different space. Of course, this reflects as Ian will explain later in better OpEx results as well. And I have to say that while we are doing this on our operated assets, also our partners in the non operated assets are adopting a similar focus, different methods, but same focus to obtain high production efficiency. Now going into our assets and we can go to the next slide, we have Kapton.

This is the largest producer among our operated ones. And again, we have focused in three areas here. One is the drilling campaign, which is in support of growth and in support of the EOR that has performed much better than we had planned for Q1 with a twenty five percent increase compared to our plan. I’m talking about the enhanced oil recovery. You probably remember Capital Market Day, we talked about the two patents that had already responded.

Now we are four patents responding positive So we are looking at it very, very positively. And during the Q1, we’ve drilled two wells and have moved on and there are new ones coming in online in the quarters to come. Like all assets also in Captain, we had a focus in production efficiency, which has been 2% higher than we had planned. And so this also helped increasing our production performance in Captain.

And in the end, I want to talk about the fact that the flotel is moving now to the site is expected to arrive at the May for the maintenance campaign, which of course is a key activity to optimize the facility, reduce the maintenance backlog and extend the life of the asset that we consider very valuable. Then we move to the asset, which is in fact the start of the moment. Production of Cygnus started in 2016 with 11 wells, which are now producing and there are three additional wells, C-twelve, C-thirteen and C-fourteen, which make the current approved well campaign. The first of the two wells is being drilled in 2025 and is spud in Q2 twenty twenty five and expected to be on stream in the second half. And the second well is expected to be on stream at the beginning of next year.

And now we are also starting opportunity to further expand the infill drilling with three more wells C15 to C17 following the current campaign. Cygnus is a modern facility with low emission. The Q1 performance in emission for Cygnus is at 5.9 kilogram per BOE. You remember the numbers I was talking about earlier. So it’s really low emission, low emission field, one third of our company average and of course one fifth of basin if you want to look at it a waterway.

Probably one of the best fields, if not the best field in the basin. And going to our next field I want to focus on that is the J area where Q1 saw the first production of Jocelyn South in mid March, which I remind was discovered in December. So very quick turnaround and its initial rates have overcome the expectation at half the rate of Talbot, another field that was put in production in November and both are providing us with better rates and also an extended plateau compared to the plan. So this has been a big contributor to our improvement production in Q1 twenty twenty five. And the good results of these two fields of course, these two tiebacks affirm the quality and the value that can be extracted on the asset and there is a further infilling well, which is ongoing and there is another one sanctioned, which is coming in Q1 twenty twenty six.

So a lot of value to be extracted yet from J area. And with that, I pass the ball back again to Yaniv.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thank you, Luciano. So talk a bit about strategy and looking at our keep saying we have a lot of optionality around our portfolio and how we unlock material organic growth opportunity. So if we look at the Q1 highlights and Luciano mentioned this around Joslyn South and Tal, but looking at kind of future projects that we have. So Rosebank development progressing as planned with 2025 campaign commenced in April 2025. We’re doing some refresh work on Canva, which is nearing completion.

That’s another benefit of the E and I relationship of this combination that we’re utilizing technical capabilities of VNI through our technical service concept with draft field development plan submitted to the NSDA during April 2025. So when we’re looking at our organic portfolio, as I said, optimizing and Luciano went through the key assets that we have, our main contributors to production. So we’re seeing that and obviously looking at the future of our organic growth opportunities. Opportunities. If we look at what we call inorganic, but some of them are in a way organic because it’s assets that we like.

So we’re consolidating in our core UKCS market. As we’ve said, and I think we’re demonstrating this, we’re actively pursuing further value accretive opportunities, adding stakes in well understood and liked assets across our existing portfolio. So we spoke about this in our Capital Markets Day. We’ve announced the acquisition of Japx, increasing our stake in the high quality, well understood Siegel asset from 35% to 50%. We’re not operators on that asset.

But in Q2 transaction we’ve announced yesterday, the acquisition of over 46% in Cygnus field from Spirit Energy, that’s increasing our operator working interest in a high margin, high quality gas field to 85%. And Ciano mentioned the efficiency in Cygnus, which is really outstanding. And for us, increasing our position, being an operator that allow what’s allowing us to really focus and make changes to improve efficiency, that’s even more value for us, right? Now we can do this at 85%. So this is the type of things that we would like to do.

I think we’re demonstrating that we can do that. And part of it is also the fact that Ithaca grew through acquisition, in the past, and I believe our counterparties know that we can move quickly, we can execute opportunities and be agile as we keep saying. So to be more specific, and I’ve covered this in the last presentation, so I wouldn’t spend too much time on this, but the Japx acquisition increased stake in the high quality Siegel field that adds about 4,000 to 4,500 barrels per day pro form a production this year. Cash generative assets that’s going to produce until the mid-2030s. We’ve inherited some historical tax losses here Effective date was 01/01/2024.

So completion on track for 01/2025. And so effective date 2024 means we’re benefiting from cash flows from 01/01/2024. And if you remember our investment criteria metrics, so this ticks the box on all of them, IRR, payback periods, operating cash margins, DPI, breakeven and emissions. So that’s an easy one for us to digest as well. And again, announced yesterday, increasing the stake in Cygnus, Attractive investment metrics under $7 per BOE of 2P reserves, high margin, low emission, as Luciano mentioned, our operated Cygnus gas field, largest gas field in The U.

K. We’re ongoing infill drilling in the area where we see further upside potential, further drilling potential. So we really, really like this asset. On pro form a basis, this is going to add around 13,000 barrels of net production in 2025. Effective date here is January 2025, and we’re targeting completion of this in October, obviously waiting for an SDA consent.

Again, delivering on key investment metrics for us, IRR, short payment period, this is under two years of payback, so very attractive operating cash margins, DPI, breakeven and emissions. I’ll hand over to Ian. Next slide for the financial overview. Ian, please.

Ian Lewis, Chief Financial Officer, Ithaca Energy: Thanks, Yaniv. Yes, so moving to Slide 21. Good morning, everyone. So calling out some of the key financial performance metrics for the quarter, so the 127,004 barrels a day production, You see the split of about 59% oil or liquids and 41% gas. Now obviously that’s one of the additional benefits of additional Cygnus interest coming towards the end of the year.

One October our forecast for completion as Yanis mentioned as it adds to our gas weight and so brings us back more towards fifty-fifty in the gas oil split. You can see that the high production together with good cost management has driven a $16.5 per BOE OpEx for the quarter and the $653,000,000 of EBITDAX as referenced before record production and record EBITDAX in the quarter. Now the cash flow from operations before working capital is $65,000,000 and relatively close to EBITDAX, which in a quarter where variable cash tax is paid is a kind of reasonably good calibration. Net cash from ops after working capital is $45,000,000 The biggest reason for the difference there is an underlift build of 160,000,000 through the quarter that will reverse through the year, but affecting cash flow from ops directly in the quarter. On the bottom left there you have the loss for the period, so in a really good operational quarter, but there is the deferred tax, the one off non cash deferred tax charge of $327,000,000 that comes through the quarter.

Now this was lagging our year end results. All our peers, obviously are taking the same. This is the two year extension of the EPL from March 28 to March 2030 and comes through as deferred tax charge uplift on the PP and E balance. So it’s an accounting technical adjustment that was always going to come through in Q1 and that’s resulted in loss for the period. Adjusted for that of course, $69,000,000 in terms of net income for the quarter, so reflecting strong delivery and strong profits as adjusted.

The bottom two figures on this chart liquidity over $1,100,000,000 at the end of the quarter and pro form a leverage 0.38 times and of course that’s on the basis of a net debt figure, was slightly higher than it would have been if the underlift hadn’t been built and the cash had been brought through from that. So low leverage, high liquidity, just underpinning our strong financial position and performance closing out the quarter. Moving to Slide 22, on our standard breakdown of EBITDAX, so that you can see all the details here, really great set of numbers in terms of performance in the quarter. You can see that moving oil and gas stocks called out there in the kind of middle row at 161,000,000 impact. And you can see that including that the value from production generated in the quarter of $74 per barrel, total of $852,000,000 before operating costs of $16.16 $50 a barrel, 189 in total.

So kind of net back after OpEx of $57 a barrel and $6.3 EBITDAX. So you can see the strong ability to deliver cash flow, deliver low cost and high net back to these assets and adding additional stakes in Seagull from one July and Cygnus from January will just help improve all of these metrics as they are high quality, high netback assets. Moving to Slide 23, a bit of a summary of our OpEx per barrel position. So our guidance at the start of the year was around 20 a barrel in the kind of low 20s and we were aiming to bring that under $20 a barrel. The guidance up revved for the deal that we announced with Cygnus yesterday to take us to $19.7 a barrel at the midpoint on guidance.

And to put that in context, can see the Q1 number of $16.5 in the slide here. So and as Luciano has mentioned, there’s the benefits of smooth operations and of high production efficiency. It means that you have high production, but also smoother cost execution. I would say just in context, the strengthening of the pound versus the dollar in the quarter clearly goes in a negative direction for our cost base. So we have a GBP primary cost base that’s converting dollars for reporting purposes.

We have been well protected by good hedging that we did, but there is a bit of hedge gain in here and some upward pressure on costs due to the exchange rate that we have more than managed by our good execution and cost management through the quarter. So really good numbers and showing a well controlled cost base as we move through the year with an aim to get below 20 for the full year. Moving on to slide 24 and a bit of an overview of our leverage position and again just calling out the key numbers in the slides that we normally show. You can see at the March on the first graphic that we are, down at $7.92 and as mentioned that includes $160,000,000 of underlift build. So clearly it could have been materially lower.

We expect that really to unwind through the year. As you can see just with that in the middle column, have liquidity of $1,100,000,000 Again, we look to maintain liquidity and capacity so that we can move as Yves mentioned with agile response to opportunities in the market with firepower for growth maintained and we continue to work through that in the quarter. You can see that brings us at the bottom right to a leverage of 0.38 times maintaining our financial capacity. In terms of the next slide, Slide 25, just a bit of a call out on our hedge position. So clearly since the end of the quarter there has been an adjustment in macro environment and oil price has dipped in the front end.

We’d call out that actually given the backwardation in the oil market before those moves and the no contango position that we’re in, the actual 26, 20 seven plus oil price hasn’t really moved much at all. But the 2025 prices have and this is why this is so important that we have this good strong hedge book for 2025, which has been called out here. So we have a strong oil hedge position with weighted average floor above $70 a barrel. So that’s color floors and swaps. So it’s the kind of minimum pricing for our instruments.

Are colors and swaps of over $70 a barrel. You can see that the profile layer of strong Q2 through Q4 oil hedging and then a really full gas book in terms of the rest of the year with weighted average floors of about 90p a therm and ceilings going up to 130. So lots of upside opportunity, but downside protection on the gas book and on the oil book, which is all about our delivery of cash flow and protection of the short term business. So again, to show material hedge strength underpinning our confidence as we move through the rest of the year. Okay.

I’ll hand back to Yaniv to close out.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thank you, Ian. And if we’ll move to Slide 27, just before we open for Q and A, just again to highlight and recap what was said on this call. So record quarterly production, hundred and twenty seven four barrels per day production, over six and fifty three thousand adjusted 1,000,000 adjusted EBITDAX, which reflects the material scale that we have today, the diversification, the operating capacity and the focus that we have on operations efficiency. HSE improvements, production efficiency, our perfect day, and we’re seeing this, and I think that’s another message that we’re seeing. We’re seeing this trending into Q2 as well.

So as we said at the Q4 results, we’re seeing this trend continuing of increased efficiency into Q2. Q4 cost per barrel, dollars 60.5 boe demonstrates the high netback capability of our combined group, so obviously Q1. And material activity ongoing on sustaining and optimizing production. And at the same time, we’re executing on our growth strategy on The UK consolidation, high margin, high value opportunities. So this gives you a really good picture of where our business is right now, where we’re headed.

I’ve mentioned the optionality in our organic growth opportunities and putting us in a really, really interesting position as we head into the year rest of 2021. So with that, I will open for questions.

Sami, Call Coordinator: You, Our first question Sasikanth Chilukwu, Morgan Stanley. Your line is open. Please go ahead.

Sasikanth Chilukwu, Analyst, Morgan Stanley: Hi, good morning. Thanks for taking my questions. I had two please. The first was on M and A. You’ve been very busy here in this space.

I was just wondering if you could talk about the M and A market in The UK, more specifically, the quantity and the quality of the assets available in the market more recently, especially in the context of the criteria that you have for acquisitions as well. Do you classify this as either a buyer’s market or a seller’s market? The second was on the Kapton project. Good to see improved performance at the field. I was wondering if you could highlight what the current production level was or the production level was in 1Q?

And remind us of your expectations of the production levels by the year end and the peak production rate as well?

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thanks, Assi. I’ll take the first question on M and A. Look, we can look around, I guess, and since the autumn budget, we’ve seen kind of increased interest in The UK CS. So this was the Shell Equinor announcement. Obviously, we had our combination with DNI.

There were a few kind of other rumors about deals discussions, etcetera. But I think the way and I can’t really categorize this if this is a buyer’s market or a seller’s market. When we look at this, we look at this from a value lens. Right? So for us, it’s important to meet our investment metrics.

I think we have a really, high quality portfolio. And it’s quite obvious that we’re trying to high grade and and and and add assets that will contribute and will be accretive to our portfolio. And, you know, the the more you do, the the less opportunities you have. But, you know, we we still think and we still see value in the in the UKCS. You know, we hope that the current consultations around the future of the North Sea fiscal Scope three guidelines will lead to sensible outcomes that would allow us to keep growing our business.

I think we’re doing a lot of work on the M and A side. This is how we Ithaca became what it is today. So we see value in that, and we’re trying to be very methodical in the way we analyze this. And it’s I don’t think there are a lot of companies that have done eleven, twelve acquisitions in five years, two in two months. So yes, we’re active and we keep looking for accretive

Sami, Call Coordinator: opportunities.

Luciano Vazquez, Chief Executive Officer, Ithaca Energy: Answering on the Kapton production, as I said, we are pleased with the performance that we’ve observed in Q1. Production overall has been with an efficiency which with a performance worth 15% higher than we had planned around 21,000 barrel BOE net to which the particularly good performance of the EOR response contributed significantly together with production efficiency as I mentioned earlier of 2% ahead of our plan. So all in all, all the metrics are looking good for Kapton.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Any other questions?

Sami, Call Coordinator: Our next question comes from Kian Evan Cowie from Bank of America. Your line is open. Please go ahead.

Kian Evan Cowie, Analyst, Bank of America: Hi, good morning everyone. Thank you very much for taking my questions. So today you’ve reiterated your dividend target for 30% post tax cash from operations and also the $500,000,000 target for the year. Now given the current oil price environment we’re in, I wonder if you could perhaps comment on how and if your thinking has changed on this front. And then with the two targets, could you tell us maybe about how you’re thinking about the relative importance of each of them?

And then to say maybe at the end of the year, if the $500,000,000 was slightly above that 30%, how comfortable would you be in paying that $500,000,000 And how confident should we be in that monetary target? And then perhaps if you could comment on a related note for 2026 and beyond, could you maybe elaborate on what goes into the decision making process on where you fall between that 15% to 30% range? Thank you.

Ian Lewis, Chief Financial Officer, Ithaca Energy: Sure. So let me take that Kian. In terms of dividends, think there’s no change in what we’ve said before. We have committed 30% post tax cash from operations as what we will distribute and the target is $500,000,000 There are a number of ways to get to $500,000,000 as being 30% post tax cash from operations. So, and clearly operational performance like we’ve had in Q1 will help us to get there.

So it’s too early in the year to even consider I think the differences in those in fact $500,000,000 is a reasonable place to peg us especially given the hedging position. So, strong hedging and strong performance on both cost management and production takes us to where we expected to be in terms of our policy for the year. In terms of future, again, the call out on our capital allocation framework is consistent here. 15% to 30% is our range that’s always giving us opportunity to flex up and down based upon prices in the market and also our capital program and plans, but it’s I think the clearest policy out there in UKCS upstream. No more detail to be given for future years now.

We’ll update that at the end of twenty twenty five, but I think a pretty clear policy.

Sasikanth Chilukwu, Analyst, Morgan Stanley: You.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Again, on the M and A question, it’s we’re we’ve announced two transactions in assets that we’re already in. So when we look at this and when we analyze this, these are assets that we like, that we know very well. So it’s really reducing the risk when we’re executing on these acquisitions. We maybe in this situation see something that others can’t see in those projects. So we’re seeing potential upsides or even upsides in these projects.

So we like the fact that it’s easy for us to analyze. It’s reducing the risk, but it’s also easy to digest, right? These come with very limited, if at all, organizational burden, if you wish. So there’s really no integration per se of these assets. It’s same team, same people understanding the assets.

And in assets that we like and we believe that there is upside, we would like to take more working interest. So I think that plays into your question.

Kian Evan Cowie, Analyst, Bank of America: Thank you. That’s very helpful.

Sami, Call Coordinator: Our next question comes from Werner Riding from Peel Hunt. Your line is open. Please go ahead.

Werner Riding, Analyst, Peel Hunt: Thanks. Good morning, guys. A question on Slide six, a couple of questions. First, I was wondering if you can perhaps break down how the producing assets CapEx is allocated per asset? And of the cash tax payment, how much is EPL versus CT and SCT?

Is it 100% EPL?

Ian Lewis, Chief Financial Officer, Ithaca Energy: Sorry, yes. So to the first one, first steps of CapEx and we don’t obviously give breakdown by asset. But we’ve always said that despite Rosebank being the biggest single commitment capital spend, Captain is the second and that’s because we’re doing drilling on the Captain field and we’re also upgrading and extending the life of lots of aspects over the field through the hotel campaign that we’re kicking off this summer with the safe Caledonia coming in and a number of kind of major upgrades scopes. So Kapton is material to when you add the polymer injection and you’re well over $150,000,000 of investment in Kapton. So that’s a big program.

Cygnus clearly is a drilling program on the field as the seagulls continues. So these are the kind of operated positions and then you’ve got the non operated investments in like the G area etcetera that comes through. So I think the guidance is as per the year end, the adjustments for Cygnus. So a consistent story of kind of capital investment or core assets. In terms of the tax question, can just restate that one, Ranjan, so I’ll make sure I got that one right.

Werner Riding, Analyst, Peel Hunt: Yes. So just wanting to know of the combined cash tax payments you’re expecting to make, how much of it is EPL versus CT and SCT? Is it pretty much all

Ian Lewis, Chief Financial Officer, Ithaca Energy: As per our kind of track record, it’s very largely EPL. So what we’ve paid in Q1 was $20 odd million, which was $16,000,000 was EPL and another six or so SCT or CT and SCT. So there will be some CT to pay as well and clearly the deals move things around as well in terms of assets in the group. But yes, it must be 90% EPL on the cash flow cost.

Werner Riding, Analyst, Peel Hunt: All right. Great. Thanks a lot.

Sami, Call Coordinator: Our next question comes from Chris Wheaton from Stifel. Your line is open. Please go ahead.

Chris Wheaton, Analyst, Stifel: Thank you. Good morning, everyone. Thank you very much for taking my question. Well done on the production uptime in 1Q. I think huge pass on the back to Odin and his Perfect Day plan.

So it’s clearly paying dividends. My first question is around that. Is it possible for you to give some more detail on the particular assets bridge from the 116,000 a day you did in 4Q to the 127,000 a day in 1Q? Feels like most of that upside was from Tolbert and Jocelyn, but that also means the decline was offset by better performance in the base. I’m kind of interested, is that characterization accurate?

Then a couple of questions for Ian, if I may. Firstly, can you give us numbers on cash tax and working capital outflow to bridge from that operating cash flow to net cash flow? And secondly, in your commentary, you talked about underlying OpEx inflation. I’m interested in what you think that OpEx inflation is because clearly, the windfall tax is having an impact on activity. It’s driving up costs.

What kind of cost inflation are you starting to see in the North Sea? Thank you.

Ian Lewis, Chief Financial Officer, Ithaca Energy: Yes. So I’ll maybe start with the first deal and we’re back at the production to Luciano. But so in terms of inflation, I guess, we’re not seeing we’re already seeing cost inflation in our base, I would say, of FX impact, which is it’s relatively minor, but you move from the high 120s to 33, one hundred 30 four and we’re well hedged on FX actually, but it still has some impact in terms of the flow through of the numbers. But I think we’re continuing to see our very active cost management and supply chain management working with our vendors and long term suppliers in terms of arrangements, I mean that we’ve got a very stable cost base. And in fact, with the E and I and Neptune assets coming in, we’ve been looking at all of our contracts again as part of that integration process as normal.

And again, just seeing the day by day small synergistic aspects of building a wider portfolio with the same supplier. So I think in terms of OpEx, it’s primarily a bit of FX noise rather than basin wide inflation, I think coming in. We are seeing less suppliers in the basin, able to offer services, still competition, but not significant inflation in cost. In terms of the operating cash flow bridge, few people get so interested in the bridge details, Chris, but I know you do. In the cash no, that’s all, not at all.

I think on Page 16 of our financial report, if you dig around in there, you’ll see that it was $21,700,000 of cash tax paid in the quarter. As I said, 60,000,000 of that was EPL. And you can see the inventory movement as well, although at $140,000,000 negative in the working capital with some kind of other adjustments minor in terms of receivables and payables. So I think it’s pretty well bridged in Note 16 or in Page 16 of the financial statements, happy to expand more as required either online or offline.

Luciano Vazquez, Chief Executive Officer, Ithaca Energy: Well, back on the question for on the performances. In reality, we had very good pretty good performances distributed across several fields. I mean, you don’t make that in from one field only. As much as we are protected because there are several fields and so the downsides are typically distributed, but also the upside have to be pretty distributed. So going to the specifics, both our operated major fields Captain as I spoke earlier and Cygnus with its pretty high efficiency were a bigger contributor, but also the J area as I mentioned earlier with increased performance or enhanced performance of Tabath and Joslin South.

Elgin Franklin also had a pretty good performance with an optimized management of rig movements that had been planned and then eventually were reduced in terms of the day of the downtime. And Seagull as well had good performance. So most fields had better performances and particularly the big ones had better performances. So that is how we made it how we made the number in the first quarter.

Chris Wheaton, Analyst, Stifel: Brilliant. Thank you very much and well done again.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thank you, Chris.

Sami, Call Coordinator: Our next question comes from Mark Wilson from Jefferies. Your line is open. Please go ahead.

Mark Wilson, Analyst, Jefferies: Okay. Thank you. Good morning, gentlemen. Obviously, we’re seeing Ithaca continuing with its strategy of consolidation in The U. K.

North Sea with the deals. And arguably, you seem to be something of an outlier in that regard. So that was probably my first question. Do you agree with that statement? And what sort of competition have you been seeing for some of these recent deals you’ve done?

And then the next point would be, I think really a big catalyst would be to see farm ins,

Luciano Vazquez, Chief Executive Officer, Ithaca Energy: some of

Mark Wilson, Analyst, Jefferies: the assets that you have obviously notably Cambo would be one of those. But if we could speak to that secondly and what kind of is there a potential timeline that anyone should think of that or do we have to have clarity on the environmental and the tax situation longer term before anything like that could happen? Thank you.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thanks, Mark. I’ll take these. So

Werner Riding, Analyst, Peel Hunt: in terms

Yaniv Friedman, Executive Chairman, Ithaca Energy: of growth in the UKCS, if we’re an outlier, I think it’s a sometimes reality is, I guess, is the best way to look at things, right? So I think we’re being active. In the last year, we’ve completed the E and I combination two other, albeit smaller, but not insignificant deals. So we’re active. I think and I’ve said this publicly in other places.

I believe that and when you look at the UKCS and the cost base you operate in, consolidation is important, right? So scale, the ability to get to scale gives you a lot of advantages. And you’re seeing this through our numbers, right? So we have a great team and we’re focused and we know what we’re doing, but obviously, the scale helps. So it helps driving costs costs down.

It helps in kind of diversification. So we see consolidation as something that really that’s really important. And in terms of competition, so we know there were other players that were looking at the assets that we were looking at. I can’t tell you that we see this as competition per se. As I said, we’re focused on meeting our investment criteria.

We’re very rigorous when we analyze this. And I think counterparties or sellers because of track record Ithaca has, sees us as a serious counterparty that can move quickly. You have to take decision quickly, be agile. We have our balance sheet that allows us to move quickly in opportunities, as we’ve mentioned earlier. So I think from that perspective, I guess, we’re more active than others, yes.

On farm and opportunities, specifically, you mentioned CAMBO. So again, we’ve said we’d look we would not do CAMBO at 100%. Where Ithaca is right now, we would look for farm partners. We do think that with the overall environment towards the North Sea potentially changing and some sensible decisions from the government, hopefully, on fiscal and future of the North Sea, I believe we’ll have a few candidates that will look at this as part of their West Of Shetland strategy. So but we do need to see where post EPL environment lands and how it looks before taking a final investment decision, that’s for sure.

So we would like to see farming partners that could support obviously the project from the financial perspective, but also be a technical sanity check for us. So yes, we’re as we’ve said, we would like to bring in partners for that.

Mark Wilson, Analyst, Jefferies: Thank you. Very clear. I’ll hand it

Yaniv Friedman, Executive Chairman, Ithaca Energy: up. Thanks.

Sami, Call Coordinator: We currently have no further questions. So I’d like to hand back to Jan Froedman for some closing remarks.

Yaniv Friedman, Executive Chairman, Ithaca Energy: Thank you very much for joining and for the questions. We appreciate that. And we’ll see you next quarter. Thank you very much.

Sami, Call Coordinator: This concludes today’s call. Thank you very much for joining. You may now disconnect your lines.

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