Delek Bids for Rest of North Sea's Ithaca

Israel's Delek has bid for the remaining shares in UK-focused upstream minnow Ithaca, which the Canadian company's board has recommended. Delek already owns 19.7%, and the bid of C$1.95 (£1.20)/each represents a big premium to the average analyst's consensus price of C$1.60/each.

According to Ithaca's London Stock Exchange notice, Delek has confirmed that it has sufficient resources available to fund the cash consideration for all of the shares acquired pursuant to the offer and for all payments that may become payable as a result of Delek and its affiliates owning more than 50% of the shares. The offer implies a total enterprise value of about US$1.24bn (£1bn), including debt.

Ithaca's non-executive 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."

Ithaca, which is also listed in Toronto, produces over 10,000 barrels of oil equivalent/day, a figure set to rise sharply when the first oil and gas from the Greater Stella area comes on stream later this month, adding about 16,000 boe/d net to Ithaca, the operator with 54.7%. The development involves the drilling of subsea wells tied back to the “FPF-1” floating production unit, with the onward export of oil and later gas. Initially gas may be reinjected.

FPF-1, built in Poland, was expected to start production last November

(Credit: Ithaca)

Ithaca's interest in the Greater Stella area is the chance to market over 30mn boe of net proven and probable reserves in the North Sea Central Graben area and the generation of additional value via the wider opportunities provided by the range of undeveloped discoveries surrounding the production hub.

Delek is active in Israel, where it is partner in the major Leviathan offshore gas field, yet to come on stream. Last week, Anglo-Dutch major sold stakes in a number of assets in the UK North Sea, also for a higher price than expected.

William Powell