23-05-2025
Ithaca Energy PLC (STU:XE3) Q1 2025 Earnings Call Highlights: Record Production and Strategic ...
Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Ithaca Energy PLC (STU:XE3) reported a record quarterly production of 127,400 barrels per day, demonstrating enhanced operating capacity.
The company achieved a record quarterly adjusted EBITAX of $653.2 million, supported by a reduction in OpEx per barrel.
Ithaca Energy PLC (STU:XE3) has successfully executed strategic acquisitions, including increasing its stake in the Cygnus Bravo project to 85%, which is expected to add significant production capacity.
The company maintained a strong safety record with zero incidents reported, emphasizing its focus on safety and environmental performance.
Ithaca Energy PLC (STU:XE3) reaffirmed its commitment to shareholder returns, with a third interim dividend paid in April and a target dividend of $500 million for 2025.
The company reported a loss for the period due to a one-off non-cash deferred tax charge of $327 million related to the extension of the EPL.
There is an increase in the net OpEx range by $10 million and net producing asset CapEx by $20 million, which could impact future profitability.
The strengthening of the pound against the dollar has put upward pressure on costs, despite hedging efforts.
Ithaca Energy PLC (STU:XE3) faces challenges in the M&A market, with limited opportunities for accretive acquisitions as the company continues to high-grade its portfolio.
The company is awaiting clarity on the environmental and tax situation in the North Sea, which could impact future projects like the Cambo development.
Warning! GuruFocus has detected 6 Warning Signs with STU:XE3.
Q: Can you discuss the current M&A market in the UK, particularly in terms of the quality and quantity of assets available? Would you classify it as a buyer's or seller's market? A: We have seen increased interest in the UKCS since the autumn budget, with several deals and discussions taking place. It's difficult to categorize the market as strictly a buyer's or seller's market. We focus on value and meeting our investment metrics, aiming to add high-quality, accretive assets to our portfolio. We continue to see value in the UKCS and are methodical in our approach to M&A.
Q: What are your current production levels for the Captain project, and what are your expectations for year-end and peak production rates? A: In Q1, Captain's production was around 21,000 barrels of oil equivalent per day, which was 15% higher than planned. This was due to the enhanced oil recovery response and production efficiency being 2% ahead of our plan. We are pleased with the performance and expect continued strong results.
Q: You've reiterated your dividend target for 30% post-tax cash from operations and a $500 million target for the year. How confident are you in achieving these targets given the current oil price environment? A: We remain committed to distributing 30% of post-tax cash from operations, with a target of $500 million. Strong operational performance and hedging positions support our confidence in achieving these targets. The 15-30% range allows flexibility based on market conditions and capital plans.
Q: Can you provide more detail on the allocation of CapEx per asset and the breakdown of cash tax payments between EPL, CT, and SCT? A: While we don't provide a detailed CapEx breakdown by asset, Captain is a significant focus with over $150 million invested, including drilling and upgrades. Regarding cash tax payments, approximately 90% is EPL, with the remainder being CT and SCT.
Q: What is your perspective on consolidation in the UK North Sea, and what competition have you faced in recent deals? Also, what is the potential timeline for farming in assets like Cambo? A: We see consolidation as crucial for achieving scale and cost advantages in the UKCS. While there is competition, our track record and ability to move quickly make us a preferred partner. For Cambo, we seek farming partners and await clarity on fiscal and environmental policies before making further decisions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
