Ithaca Energy Q1 Earnings Call Highlights

Key Points

• Strong Q1 performance: Ithaca Energy posted average production of 126,000 barrels of oil equivalent per day, in line with its full-year guidance, despite weather-related disruptions. The company also highlighted zero Tier 1 and Tier 2 process safety events and improving emissions intensity.
• Healthy cash generation and shareholder returns: Q1 EBITDA reached GBP 0.6 billion, free cash flow was GBP 151 million, and adjusted net debt remained low at GBP 1.1 billion. Ithaca said full-year dividends are expected to exceed GBP 500 million, near the top of its target range.
• Growth and project pipeline advancing: The company is pushing multiple organic growth projects toward FID, including Fotla, Tornado and Rosebank, while also maintaining disciplined M&A interest. Ithaca also secured a long-term rig-sharing deal with Harbour Energy to support drilling and development through 2030.

Ithaca Energy LON: ITH reported what executives described as a strong first quarter of 2026, with production in line with full-year guidance, robust cash generation and an outlook for shareholder returns trending toward the high end of its target range.

Executive Chairman Yaniv Friedman said the company delivered average production of 126,000 barrels of oil equivalent per day in the quarter, supporting cash flow generation and giving the business capital to pursue organic growth opportunities. He said the company had taken a “hard look” at ways to optimize and accelerate activity across its portfolio amid elevated commodity prices.

“We’re executing across all of our strategic pillars,” Friedman said, pointing to production optimization, organic development opportunities, farm-down activity and continued but disciplined pursuit of mergers and acquisitions.

Production Holds Within Guidance Despite Weather Disruptions

Chief Executive Officer Luciano Vasques said first-quarter output of 126,000 barrels of oil equivalent per day was in line with Ithaca’s 2026 production guidance of 120,000 to 130,000 barrels per day. He said production was achieved despite severe weather in January and mid-February that disrupted operations for several weeks.

Vasques said production averaged 120,000 barrels per day in January due solely to weather-related impacts, before recovering to a two-month average of 129,000 barrels per day. He said that recovery continued into the second quarter.

The company also highlighted its safety and environmental performance. Vasques said Ithaca recorded zero Tier 1 and Tier 2 process safety events, continuing a trend from the past two years, and had gone three months without a recordable incident across its activities. He added that the company’s emissions intensity remained substantially below the average for the U.K. Continental Shelf and was expected to improve after the cessation of production at two late-life assets in 2026.

Financial Results Supported by Low Costs and Strong Commodity Prices

Chief Financial Officer Iain Lewis said Ithaca generated EBITDA of GBP 0.6 billion in the quarter, cash from operations of GBP 0.4 billion, profit after tax of GBP 67 million and free cash flow of GBP 151 million.

Operating costs were GBP 18 per barrel, which Lewis described as the company’s “reset cost per barrel” expected through the year. He said the portfolio’s low cost base and strong production supported cash generation.

Adjusted net debt stood at GBP 1.1 billion at quarter-end, with pro forma leverage of 0.54 times and liquidity of GBP 1.6 billion. Lewis said the balance sheet gave Ithaca capacity to continue investing while delivering dividends to shareholders.

The company reiterated that full-year dividends are expected to be above GBP 500 million, within a previously stated range of GBP 470 million to GBP 520 million. Lewis said Ithaca remained committed to distributing 30% of post-tax cash from operations for the year, with a longer-term distribution range of 20% to 35%.

Hedging Strategy Aims to Protect Cash Flow While Retaining Upside

Lewis said Ithaca had been active in hedging amid volatile commodity markets, with a focus on securing cash flow into 2028 while maintaining upside exposure. He said the company had moved oil collar positions further out, including into 2028, and retained significant upside in its gas book.

“We’re looking for long-term stable cash flows with upside optionality and delivery,” Lewis said.

In response to a question from Cian Evans-Cowie of Bank of America, Lewis said Ithaca was generally receiving prices above Brent futures for unhedged oil barrels, while also emphasizing the importance of gas pricing. He noted that roughly half of the company’s production in the quarter was gas and said NBP pricing had been strong.

Organic Growth Pipeline Advances Toward FID

Friedman said Ithaca is advancing more than 200 million barrels of oil equivalent of resources toward final investment decision over the next 24 months. He highlighted Fotla and Tornado as two projects the company is accelerating in the current commodity price environment.

For Fotla, Friedman said Ithaca had completed a farm-in arrangement with Harbour Energy after previously acquiring full ownership of the opportunity. He said the project had moved through exploration success, partner buyout and environmental statement submission, and was now progressing toward execution. He described Fotla as a high-value opportunity despite its smaller size of about 10 million barrels of oil equivalent.

For Tornado, Friedman described the project as part of Ithaca’s West of Shetland gas strategy and a potential enabler for future tie-backs. He said Tornado was progressing through regulatory approval thresholds and could support further infrastructure-led exploration, including the Spitfire prospect.

Ithaca also announced a long-term rig-sharing agreement with Harbour Energy for the semi-submersible rig Paul B. Loyd Jr. Vasques said the 50/50 sharing arrangement covers 2026 to 2030 and would support infield drilling, organic growth projects such as Fotla, and plug-and-abandonment activities.

At the Captain asset, Vasques said one well had been brought into production at the beginning of the year, another was close to coming online, and additional workover and drilling activity was planned. At Cygnus, he said the C13 infield well began production in early May and was performing better than forecast, with additional wells planned.

Rosebank, Cambo and M&A Remain in Focus

Vasques said the Rosebank development had entered its final full year of development activity and was progressing toward first production within the operator’s stated 2026-27 window. The Rosebank FPSO sailed from Dubai in the first quarter after major refurbishment work and was in Bergen, with a move to location planned in the second quarter.

The drilling campaign began at the end of the first quarter, but Vasques said an equipment-handling incident took the rig offline in April. The rig operator estimated three to four months of remediation before returning to hire. He said the operator’s current view was that the incident could be accommodated within the broader project schedule.

During the Q&A, Friedman said the Cambo project continues to progress toward a potential FID next year, subject to technical, financial and regulatory work, including consents. He said Ithaca also intends to bring in a farm-in partner for Cambo and that the project ranks favorably under the company’s investment criteria.

Asked about acquisitions, Friedman said Ithaca remains interested in further consolidation in the U.K. Continental Shelf but would not pursue scale for its own sake. He said any transaction would need to meet the company’s investment criteria and high-grade the portfolio, while Ithaca also looks for opportunities to diversify outside the U.K.

About Ithaca Energy LON: ITH

Ithaca Energy is a leading UK independent exploration and production company focused on the UK North Sea with a strong track record of material value creation. In recent years, the Company has been focused on growing its portfolio of assets through both organic investment programmes and acquisitions and has seen a period of significant M&A driven growth centred upon two transformational acquisitions. Today, Ithaca Energy is one of the largest independent oil and gas companies in the United Kingdom Continental Shelf (the “UKCS”), with stakes in six of the ten largest fields in the UKCS and two of UKCS's largest pre-development fields.

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