The North Sea has been held up as an investment dead zone, with jobs being shed at an alarming rate and energy companies cutting spending on projects. Recent behaviour by Harbour Energy (HBR) and US oil firm Apache attest to this. However, there is a new giant in the region: Ithaca Energy (ITH).
Tip style
Income
Risk rating
High
Timescale
Medium Term
Bull points
- Higher earnings and production through Eni deal
- Big uptick in cash flow expected
- Ambitious dividend targets
- Further M&A likely
Bear points
- Risky regulatory environment
- Junk-grade debt rating
- Poor liquidity
Far from withdrawing investment, Ithaca has just completed a £750mn deal with Eni (IT:ENI), the Italian energy major, to acquire most of its UK oil and gas fields. The all-share tie-up has vaulted Ithaca up the ranks of producers and significantly expanded the debt funding available for growth.