North Sea focused Ithaca Energy has received a $66 million funding boost which will allow it to explore further opportunities in the Greater Stella Area.
The deal marks the first move into the North Sea by DKL Investments, a subsidiary of Israeli energy conglomerate Delek Group.
DKL is snapping up a 19.9 per cent stake in AIM-listed Ithaca through a placing of new shares, making it the largest single shareholder.
It is paying the equivalent of 53p pence share, a significant premium from the 44.5p which Ithaca closed at on Thursday and said to be a 51 per cent premium on the 30-day average of the stock.
Shares in Ithaca surged by more than 15 per cent after the announcement, changing hands for around 52p.
Aberdeen-based Ithaca said the cash will be used to strengthen its balance sheet and reduce its debts.
Along with that it will start to look at undeveloped finds in the Greater Stella acreage which it can tie-back to the large production facility it is setting up there.
Les Thomas, chief executive officer, said: "We are pleased to have secured Delek's investment in the company at a significant premium to the prevailing share price at this time of uncertain oil prices.
“The investment provides a solid vote of confidence in the long term value of Ithaca by a successful oil and gas investor and provides additional flexibility to execute the financial and strategic priorities of the business."
Once the placing is completed Delek will have the right to nominate two non-executive directors to the board of Ithaca.
In a note Ithaca’s house broker Cenkos Securities said: “This demonstrates Delek’s endorsement of Ithaca’s quality asset portfolio and management.
“With an extensive hedging programme in place, Ithaca is largely protected from lower Brent prices.”
Delek said the move is part of its “strategy to identify international investment opportunities in the energy field”.
Ithaca is a partner in 11 producing oil and gas field, where it acts as operator in three of those.
The Greater Stella field is scheduled to begin producing oil in the second quarter of next year.
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