North Sea explorer Ithaca agrees to £517m takeover

North Sea-focused oil and gas group Ithaca Energy has agreed to a takeover bid from an Israeli suitor that values the firm at C$841 million (£517m).

Delek's bid has been unanimously recommended by Ithaca's board. Picture: Danny Lawson/PA Wire

The size of the proposed deal for Aberdeen-based Ithaca is seen as a further sign of a revival of interest in the North Sea on the back of a partial recovery in the oil price.

Ithaca, which is listed in London and Canada, said the 120p per share bid from Delek Group has been unanimously recommended by its board and represents a premium of 12 per cent to its closing share price on Friday.

Analysts at Panmure said although the premium is not particularly large, “the fact that a bid at scale is on the table should be positive for the sector”.

But fund manager Paul Mumford of Cavendish Asset Management, which owns a stake of around 3 per cent in Ithaca, yesterday said the acquisition price was “relatively cheap” and that Delek Group will see “good payback in a short space of time”.

He said investors who are bullish over the outlook for oil prices should “sit tight” on the offer.

Delek already owns almost 20 per cent of Aim-quoted Ithaca and its offer implies a total enterprise value of more than US$1.2 billion (£961m), including Ithaca’s debt.

Ithaca chairman Brad Hurtubise said: “We are very pleased to announce the offer, which provides an attractive opportunity for all shareholders to secure a premium cash value for their investment following a sustained period of share price growth and at a favourable point in the company’s evolution.

“A special committee of independent directors has fully assessed the offer, with input from the company’s financial adviser and an independent valuator, and believes the offer is fair and in the best interest of the company and its shareholders and unanimously recommends that the shareholders tender their shares to the offer.”

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Ithaca, which is involved in the Greater Stella Field development, said last month that its average production totalled about 9,300 barrels of oil equivalent per day in 2016, exceeding its guidance of 9,000 barrels.

Analysts at Barclays said: “We believe the offer represents a good price for Ithaca investors and provides an exit ahead of the Stella development start-up later this month. The deal also underlines that a market continues to exist for upstream assets in maturing basins.”

Law firm Pinsent Masons is advising Ithaca on the bid and head of corporate finance Rosalie Chadwick said it highlighted “a busy start to the year which has seen a renewed level of interest in North Sea assets as prices have stabilised and expectations adjusted”.

Shares in Ithaca last night closed up 11p, or 10.2 per cent, at 118.75p. A takeover bid circular will be sent to shareholders before the end of March.

• Oilfield services contractor Petrofac has won a three-year deal extension, worth about $25m (£20m), to continue supporting BP’s North Sea assets.

Walter Thain, managing director of Petrofac Engineering & Production Services, West, said: “Over the last seven years we have developed a robust knowledge of BP’s North Sea assets. As a result, we’ve forged a strong working relationship which is evolving in line with current industry drivers and BP’s business objectives.

“We are delighted BP has demonstrated continued confidence in our ability to drive value through the integration of services and our holistic asset-led approach to delivery.”

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