Ithaca Acquires Chevron North Sea Assets

Deal Valued at US$2 billion

Oil field developer Ithaca Energy is to acquire the North Sea assets of energy major Chevron, establishing the firm as the second largest independent oil and gas producer in the UK North Sea.
The deal, valued at US$2 billion, comprises 10 producing field interests, increasing Ithaca’s asset base to about 225 million barrels of oil equivalent. The firm was positive for growth potential in the North Sea, pointing to long-term breakbulk potential.

“The acquisition of CNSL is a significant step forward in the long-term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets,” said Les Thomas, Ithaca Energy CEO.

Delek Strategic Focus

A subsidiary of Israeli conglomerate Delek Group, Ithaca Energy will fund the acquisition through an upsized US$1.65 billion reserve based lending senior debt facility, a US$700 million acquisition debt financing facility, an equity investment by Delek and existing cash resources of the company.
“We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets,” said Asi Bartfeld, CEO of Delek Group. “The acquisition is a key part of the Delek Group’s strategic focus on building a world class E&P business. Acquiring CNSL accelerates implementation of that strategy and further strengthens the Group’s oil and gas business.”

Second Oil Major Departure

Despite the positive outlook from Delek Group, the transaction marks the second oil major to pull out of North Sea exploration in six weeks, following the sale by ConocoPhillips of its North Sea oil and gas assets to Chrysaor for US$2.68 billion.

"These assets complement our existing operations and, with operating costs at less than $15 per barrel across the enlarged group, our portfolio delivers high margins and significant positive cash flow,” a spokesperson for Chrysaor said.
Both deals underline a new trend for smaller operators to usurp oil majors in North Sea operations, suggesting a changing landscape for breakbulk operations. Until recently, decommissioning activity had been predicted to be the main driver for growth in North Sea breakbulk demand but as smaller operators identify opportunities unnoticed by oil majors the lifetime of existing platforms may be further extended.
The average age of platforms in the UK is over 20 years with high maintenance costs and complex infrastructure  requirements compared to many newer competitors.