THE Israeli owner of North Sea-focused Ithaca Energy has said it is considering a flotation of the business as it moves to bolster its balance sheet.
Delek Group said it may list shares in Aberdeen-based Ithaca on the London and Tel Aviv stock exchanges under plans that could also include a debt for equity swap.
This would involve creditors of Delek being given the opportunity to exchange debts owed to them by the group for up to 25 per cent of the shares in Ithaca.
READ MORE: US oil giant in talks to sell bumper North Sea portfolio
Delek would be expected to retain ownership of at least 75% of the shares in Ithaca after completion of the exercise initially.
A flotation could pave the way for the group to sell shares in Ithaca to investors around the world.
Delek has mooted the flotation plan for Ithaca after making moves last year to reduce its debt burden. These included the sale of the Delek Israel petrol station business for around $155 million.
In August last year Delek said it was in talks about a plan to merge Ithaca with an international firm in a move that would have been expected to trigger a cash payout to the group.
The same month North Sea veteran Bill Dunnett succeeded Les Thomas as Ithaca’s chief executive.
READ MORE: Cut-price exit from North Sea by energy giant bodes ill for area
Delek’s plans have been complicated by the sharp fall in oil and gas prices triggered by the fallout from the coronavirus crisis.
Delek Group chief executive Idan Wallace said yesterday: “Further to the series of complex actions that were successfully carried out last year … we are continuing to initiate deals and to assess new steps that will lead to strengthening the Group’s capital and continuing the improvement of its financial positioning.”
Regarding the potential flotation of Ithaca, he added: “The process being assessed complements other steps we are planning in relation to our holdings in Ithaca, and will also support their success, and contains the potential for a major value creation for Delek Group and the holders of its securities.”
Delek acquired Ithaca in a £1 billion deal in 2017 under plans to build an international oil and gas business.
Ithaca went on to buy a $2 billion portfolio of North Sea assets from American giant Chevron in 2019.
READ MORE: Isareli oil firm sees opportunities in North Sea after $2bn acquisition
Ithaca cut the valuation of its assets by around $800m last year. However after making moves to cut costs the company was able to produce oil and gas at an average of just $15 per barrel oil equivalent. This allowed the company to remain profitable amid tough times in the North Sea.
In November Delek noted that Ithaca generated around $150m cash from operations in the third quarter.
It said the strong cash flow supported the distribution of a $100m dividend to the group at the beginning of November,
The Brent crude price fell from around $70 per barrel in January to less than $20/bbl in April. It has rallied to around $56 following the launch of coronavirus vaccines that it is hoped will fuel a global recovery.
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