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Delek’s Ithaca Energy to buy Chevron’s North Sea business for $2 billion

Oil and gas group to become a second-largest independent producer in UK basin

Israel’s Delek Group, which is controlled by Yitzhak Tshuva, has announced that its Ithaca Energy unit has agreed to acquire the bulk of Chevron North Sea for $2 billion.

The deal set to make UK-focused producer Ithaca the second largest independent producer in the UK basin.

The agreement adds ten oil and gas field interests to the existing Ithaca portfolio and increasing its 2019 output almost fourfold to 80,000 barrels a day of oil equivalent.

Ithaca is expected to serve as an operator in four of the ten properties acquired. It bringing a 150% increase in the reserves and a 300% increase in the forecast for 2019 production.

Ithaca’s average production cost is expected to be around $18 per barrel. The Company’s proven reserves will increase to approximately 225 million barrels of oil.

Les Thomas, Ithaca chief executive, told Financial Time the deal was “transformational” for the company and said it was a “leap into a much bigger portfolio” that would be a “giant cash machine” for its business, with no decommissioning planned for at least another 10 years.

In October 2015 Delek Group acquired 20% of Ithaca, whose shares were traded in Canada and England, and in 2017 completed a full takeover of the company and imitated its shares from the trading.

Delek invested $590 million in total. Ithaca is an operator, meaning an actual drilling contractor, which executes and develops the works in the North Sea.

Delek reported today its first-quarter results, showing that its net profit totaled NIS 290 million ($79.8 million), an improvement of 19% over the corresponding period last year.

The gas production activity in Israel, through the Tamar reservoir, contributed NIS 117 million ($32.2 million) to profit, an increase of 18% compared to the corresponding quarter last year.

Net profit from Ithaca activity in the North Sea increased by 7.5% to NIS 57 million ($15.6 million); While the profit from fuel operations in Israel, via the chain of gas stations and convenience stores of the Company, shrank by 72% to only NIS 9 million ($2.47 million).

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