Ithaca Energy to expand Seagull oil field stake with $193m JAPEX UK E&P acquisition

Ithaca Energy has announced a strategic acquisition to bolster its presence in the UK North Sea, signing an agreement to purchase JAPEX UK E&P Limited from Japan Petroleum Exploration Co. Ltd. The transaction, valued at $193 million, will increase Ithaca Energy’s stake in the Seagull oil field from 35% to 50%, matching BP‘s ownership in the project. The deal underscores Ithaca Energy’s commitment to expanding its portfolio in the UK Continental Shelf through value-driven acquisitions.

The acquisition is expected to close by mid-2025, subject to regulatory approvals and customary closing conditions. Ithaca Energy will also gain access to JAPEX UK E&P’s significant tax losses, providing financial advantages that could enhance the deal’s overall value. With additional reserves and production capacity, this move further solidifies the company’s long-term growth strategy in one of the UK’s key offshore energy regions.

What does the Seagull oil field acquisition mean for Ithaca Energy?

The Seagull oil field, located in the UK Central North Sea, is an important asset with an estimated 300 million barrels of oil equivalent (mmboe) in place. It is a high-margin producing field developed as a subsea tie-back to BP’s Eastern Trough Area Project (ETAP), a central processing facility that has been operational since the late 1990s. The integration of Seagull into ETAP allows for efficient production and lower operational costs, making it an attractive investment for Ithaca Energy.

Ithaca Energy anticipates that the acquisition will add approximately 7 mmboe in 2P reserves and boost production by 4,000 to 4,500 barrels of oil equivalent per day (boe/d) in 2025, with about 82% of this output being liquid hydrocarbons. The field commenced production in November 2023 with the J1 well, followed by the activation of the J2 and J3 wells. The fourth well, J4, is scheduled to come online in the second half of 2025, further enhancing output.

The Seagull oil field is expected to remain in production until at least the mid-2030s, aligning with Ithaca Energy’s broader objective of securing long-term, stable production from established assets in the North Sea.

How does the financial structure of the deal benefit Ithaca Energy?

Ithaca Energy’s acquisition of JAPEX UK E&P involves an estimated upfront payment of $140 million, assuming a mid-2025 closing date. The deal is structured with customary price adjustments based on the final closing date, reflecting fluctuations in asset performance and operational expenditures. The valuation equates to roughly $10 per barrel of oil equivalent (boe), excluding tax losses, which reinforces the strategic rationale behind the acquisition.

One of the most notable aspects of the transaction is JAPEX UK E&P’s accumulated tax losses, which amount to approximately $215 million under the UK’s Ring Fence Corporation Tax and Supplementary Charge Tax. Additionally, the company holds around $105 million in Energy Profit Levy losses, reflecting prior investments in the Seagull field. These tax attributes are expected to provide Ithaca Energy with significant financial flexibility, offsetting tax liabilities and enhancing overall profitability from the asset.

How has Ithaca Energy’s stock responded to the acquisition news?

The announcement of Ithaca Energy’s acquisition has been met with a positive market response, reflected in a 2.2% increase in the company’s share price. Following the news, Ithaca Energy’s stock rose to 140 pence, demonstrating investor confidence in the strategic move.

Over the past year, Ithaca Energy’s stock has traded within a range of 94.38 to 151.80 pence. On March 25, 2025, the stock opened at 132.00 pence, fluctuated between 132.00 and 142.18 pence during the day, and ultimately closed at 141.20 pence. The company’s price-to-earnings (P/E) ratio currently stands at 16.45, while its dividend yield is an impressive 12.71%, reflecting its strong shareholder return policy.

Investor sentiment surrounding the acquisition has been largely optimistic, as the deal aligns with Ithaca Energy’s growth strategy and strengthens its production base. The market reaction suggests that the company’s focus on acquiring high-value North Sea assets is being well-received by stakeholders.

What does this mean for the future of Ithaca Energy in the UK Continental Shelf?

Ithaca Energy has been steadily expanding its portfolio through acquisitions, focusing on assets that provide both immediate production growth and long-term reserves. The purchase of JAPEX UK E&P’s stake in the Seagull oil field is consistent with the company’s strategy of acquiring high-quality, producing assets that offer cost-efficient development opportunities.

The UK Continental Shelf has remained a key area for energy production despite regulatory challenges and evolving environmental policies. While the UK government continues to push for energy transition and renewable investments, oil and gas assets in the North Sea remain critical for domestic energy security. The Seagull oil field, with its stable output projections, positions Ithaca Energy to capitalize on continued demand for hydrocarbons while maintaining cost efficiency through its tie-back infrastructure at ETAP.

Industry analysts view Ithaca Energy’s latest acquisition as a strategic step that enhances its production portfolio and financial resilience. The additional stake in Seagull provides the company with greater control over field development decisions, allowing it to optimize production strategies alongside BP.

Should investors consider Ithaca Energy’s stock as a buy, hold, or sell?

Ithaca Energy’s stock has shown resilience over the past year, and the latest acquisition is expected to further strengthen its financial position. Given the company’s strong dividend yield, ongoing production growth, and value-driven acquisitions, analysts suggest that Ithaca Energy remains a “hold” for existing investors.

For new investors, the stock presents an opportunity to gain exposure to a well-established North Sea producer with a clear growth strategy. However, market conditions, regulatory risks, and broader economic factors should be considered before making investment decisions. Consulting with a financial advisor is recommended for those looking to evaluate Ithaca Energy’s stock within the context of their broader investment portfolio.

As the UK energy landscape evolves, Ithaca Energy’s focus on high-value, long-life assets positions it as a key player in the North Sea’s future. The Seagull oil field acquisition underscores the company’s commitment to strategic expansion, ensuring a stable production base while leveraging financial efficiencies to drive shareholder value.