Delek buys Siccar Point to expand North Sea production

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Delek Group Ltd. (TASE:DLEKG), controlled by Yitzhak Tshuva, has reported that its North Sea oil and energy gas operator unit Ithaca Energy has signed an agreement to buy Siccar Point Energy. Ithaca will buy all the shares in Siccar Point Energy, which owns oil and gas production assets – the Mariner and Schiehallion fields – and a 30% stake in the proven Cambo and Rosebank commercial discoveries in the UK waters of the North Sea.

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Ithaca said that the acquisition is part of its preparations for an IPO during 2022 aimed at increasing its offshore production and ensuring long-term reserves.

Ithaca will pay $1.1 billion for Siccar Point Energy including the company’s $200 million debt to bondholders, which is due to be repaid in March 2026, although the bondholders will be entitled to immediate repayment if they prefer following the transfer of ownership.

Ithaca will finance the remaining $900 million through its existing credit line from RBL, cash accrued by Siccar Point since the start of 2022 and its own cash reserves. Ithaca estimates that based on the current rate of production and current sales and forecasts for the prices of oil and gas, it will be able to repay credit extended by RBL to finance the deal within less than 12 months from closing the acquisition. Under the terms of the deal, Ithaca will be entitled to all cash earned by Siccar Point since the start of 2022.

The deal also includes up to $300 million for the declared discoveries at Rosebank and Cambo, subject to the required investment decision and regulatory approvals, for which an extra $60 million payment is contingent, and whicvh also depends on future oil prices.

Delek Group said that the deal will increase Ithaca’s daily production capacity from 8,000-9,500 daily barrels of oil to 75,000-85,000.

Delek added that the Cambo and Rosebank discoveries are among the largest North Sea offshore oil fields yet to be developed, and there development is now considered of great importance by the British government as part of its efforts to develop domestic energy resources and ensure energy independence in the wake of the recent Russian invasion of Ukraine.

Published by Globes, Israel business news – en.globes.co.il – on April 8, 2022.

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