Investing.com — Shares in North Sea oil producer Ithaca Energy rose 3% on Monday after it agreed to buy Suncor Energy’s offshore Canadian assets for $860 million in cash, marking its first acquisition outside the UK.
Suncor could receive a further $250 million depending on average Brent crude prices over a 27-month period starting July 1, 2026. Any additional payment would be funded from Ithaca’s free cash flow.
The deal, expected to close in the first half of 2027, gives Ithaca interests in the Terra Nova and White Rose oil fields off Canada’s Newfoundland and Labrador coast.
The portfolio includes a 48% operated stake in Terra Nova, a 40% non-operated stake in White Rose Existing Lands and a 38.6% stake in White Rose Growth Lands, including the West White Rose development.
Ithaca said the assets add 103 million barrels of oil equivalent (mmboe) of proven and probable reserves, at an acquisition cost of about $8 per barrel of oil equivalent.
It expects them to contribute average production of about 30,000 barrels of oil equivalent per day between 2027 and 2031, rising to 35,000-40,000 barrels per day in 2029 as West White Rose ramps up.
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The acquisition supports Ithaca’s medium-term group production target of 140,000-150,000 barrels of oil equivalent per day.
The assets generated about $235 million of adjusted EBITDAX in the 12 months to June 30, 2026, although Ithaca said production was relatively low during the period as refurbishment work was completed and before West White Rose starts production.
Ithaca plans to fund the $860 million upfront payment with cash, its existing borrowing facility and secured financing in Canada. It said the deal is expected to immediately increase adjusted EBITDAX, free cash flow and dividend per share.
The company has also agreed to assume all decommissioning obligations for the assets. It expects production to continue into the mid-2030s, while some decommissioning work could be pushed into the 2040s.
Suncor could receive additional payments if average Brent prices exceed $80 a barrel in the year to June 2027, $74 in the following year and $73 in the final three months of the agreement period.
The transaction is subject to customary closing conditions, including approval under Canada’s Competition Act. Ithaca has agreed to a $50 million break fee in certain circumstances if the deal is terminated.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
