Ithaca Energy Now One of the Largest UK Oil and Gas Producers – Goldman Sachs

Independent oil and gas exploration and production company Ithaca Energy (LON: ITH) has solidified its position as one of the largest UK producers following its recent acquisition of ENI UK, according to Goldman Sachs.

The significant deal, valued at £754 million, has transformed the company's operations and outlook.

In a note to clients this week, Goldman Sachs said Ithaca Energy's acquisition of ENI UK has provided it with a robust balance of cash flow generation and growth assets.

Despite operating in a challenging UK tax environment, the investment bank expects the company to offer one of the highest levels of unlevered free cash flow generation and cash returns to shareholders among its peers.

The acquisition has significantly expanded Ithaca Energy's scale, with combined production now reaching approximately 110,000 barrels of oil equivalent per day (boed).

“We reinstate our Buy rating due to the company's combined production of c.110 kboed, synergies within the North Sea Continental shelf, and attractive dividend framework leading to one of the highest cash returns to shareholders among peers,” said Goldman.

Ithaca Energy's strong cash flow generation and focus on shareholder returns are expected to result in one of the highest dividend yields among its peers.

This attractive dividend framework, combined with the company's increased gas exposure, makes it a compelling investment opportunity, according to the bank that listed it as a new buy idea.

Despite the positives, Ithaca shares are down more than 27% this year, trading at around 104.8p a share.