Profits at Ithaca Energy, which is awaiting the go-ahead on the biggest undeveloped oilfield in the North Sea, rose by 9 per cent in the first quarter of 2023 as increased production offset an easing from last year's soaring wholesale prices.

A spokesman for the company, majority-owned by Isreal's Delek Group, said Ithaca still anticipates a final investment decision from the UK government on the £4 billion Rosebank oilfield in the first half of this year. Located to the west of Shetland, Rosebank is about three times the size of another controversial offshore asset, Cambo, in which Ithaca has a majority stake.

Norway's Equinor has an 80% stake in Rosebank, with Ithaca holding the remainder. At its peak the field would produce more than 70,000 barrels per day, with output starting in late 2026.

The Herald: A protest in Glasgow earlier this year against the development of RosebankA protest in Glasgow earlier this year against the development of Rosebank (Image: .)

Confirmation on the expected timeframe for a decision on Rosebank came as Ithaca reported adjusted earnings of $518.1 million (£418.3m) for the three months to the end of March, up from $474.2m in the same period a year earlier.

Realised oil and gas prices stood at $83 per barrel and 137p per therm during the latest quarter, Ithaca said, which were lower than prices of $100 per barrel for oil and 227p per therm for gas a year ealier. Production rates rose to 75,257 barrels of oil equivalent per day (boepd), up from 70,527 boepd.

The company, which has 28 producing oilfields in the UK Continental Shelf, said it is set to begin drilling an exploration well at the K2 prospect in the central North Sea.

K2 has an estimated resource potential of 102 million barrels of oil equivalent (boe). Ithaca is operator at the site with a 50% stake, with Dana Petroleum controlling the other half.

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Ithaca is also a participant in the Leverett discovery operated by Harbour Energy, where appraisal work is due to take place later this year. 

"We delivered another strong quarter and met our commitments to deliver high operational performance in a responsible manner, deleverage our balance sheet, and distribute dividends to our shareholders," executive chairman Gilad Myerson said.

"We are working constructively with the UK government to further develop our key development projects and continue to keep a watchful eye on consolidation opportunities with a focus on maximising shareholder returns."

Unit operating costs came in at $137m, or $20.30 per boe, which was at the lower end of guidance ranging from $130m to $150m for the quarter. Asset capital expenditure totalled $90m, at the bottom  of the $90m to $110m guidance range for the period.

READ MORE: Warning North Sea investment may halve but oil boss confident on Cambo

"I am pleased to report a strong Q1 2023 performance with adjusted EBITDAX of $518.1m," chief executive Alan Bruce said. "We remain focused on delivering safe and environmentally responsible operations as we execute our value-adding near-term developments such as Captain EORII, K2 and infill drilling at Alba."

The Captain project is expected to contribute to near-term production growth and increased reserve recovery. Ithaca has also initiated front-end engineering design (FEED) activity to explore the potential for electrification of the Captain field, which is located approximately 90 miles north-west of Aberdeen and achieved first production in March 1997.

The company reaffirmed its full-year production guidance for between 68,000 and 74,000 barrels of oil equivalent per day. Full-year operating costs are expected to be between $560m and $630m.

Previously listed on London's junior Alternative Investment Market (AIM), Ithaca was taken over by Delek in 2017 in a deal that valued the firm at £1bn.

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Ithaca was newly a producer at that time, but Delek added significant scale in 2019 with the purchase of stakes in 10 North Sea fields from Chevron. It went on to acquire a 70 per cent stake in the Shell-operated Cambo field located west of Shetland in April 2022 with a £1.1bn deal to take over Siccar Point Energy.

Ithaca returned to London following the introduction of new listing rules implemented at the end of 2021 that reduced the proportion of shares required to be in public hands from 25% to 10%. Ithaca has a free float of approximately 12%, with Delek its largest shareholder.

Shares in the FTSE 250 company closed yesterday's trading 7.8p lower at 144.2p.