Ithaca Energy 2025 results: production up, cash flow strong, dividend policy raised
Ithaca Energy has posted a solid 2025, with stronger production, fatter cash flows and a bigger dividend commitment for 2026. The company also moved its key West of Shetland projects forward, setting up a busy year ahead. There is a reported loss due to a one-off tax accounting hit, but the underlying picture is clearly positive.
Here is what stood out, why it matters, and what to watch next.
Headline numbers you should know
| Average production (2025) | 119 kboe/d (56% liquids, 44% gas) |
| Exit rate (Dec 2025) | ~148 kboe/d; peak day >150 kboe/d |
| Adjusted EBITDAX | $2,030.8 million |
| Net cash flow from operations | $1,745.3 million |
| Free cash flow | $683.3 million |
| Available liquidity | $1,470.1 million |
| Adjusted net income | $289.2 million |
| Reported (loss)/profit | $(84.1) million (one-off non-cash deferred tax charge) |
| Profit before tax | $840.3 million |
| Unit operating expenditure | $18.9/boe |
| 2025 dividends declared | $500 million (including $200 million payable April 2026) |
| 2P reserves / 2C resources | 354 mmboe / 304 mmboe |
| 2P reserves replacement | >130% |
| Safety and emissions | Zero Tier 1/2 process safety events; GHG intensity 17.2 kgCO2e/boe |
Dividend policy lifted to 20-35% of post-tax cash flow
Ithaca paid $500 million in dividends for 2025 and has declared a third interim dividend of $200 million, payable in April 2026. The board has raised the ongoing dividend policy to 20-35% of post-tax cash flow from operations (CFFO), up from 15-30%.
For 2026, management is targeting 30% of post-tax CFFO, equating to $470-520 million. In plain English: the cash return bar just moved higher, backed by a stronger production base and solid liquidity.
Why it matters: a larger, clearer payout framework can support the equity story in a volatile commodity environment. The balance sheet looks capable of supporting it too – leverage is low at 0.56x, adjusted net debt sits at $1.3 billion, and the $1.3 billion RBL was undrawn at year end with a further $435 million accordion available.
Operations: production engine is humming
Average 2025 production was 119 kboe/d, up sharply year-on-year, with a punchy exit rate of ~148 kboe/d after new wells landed at Cygnus, Seagull and J Area in Q4. Unit opex improved to $18.9/boe, highlighting good operating leverage as volumes rose.
Key drivers in 2025:
- Captain – heavy activity including well work and a major shutdown to reduce backlog and extend life; flotel campaign extended to safeguard long-term performance.
- Cygnus – infill programme continued; well C12 onstream in December, with three further wells sanctioned on Cygnus Alpha and potential Cygnus Bravo wells heading towards FID in 2026.
- Seagull – fourth and final well completed; start-up achieved in November with strong early performance.
- J Area – best net average production in a decade, over 20 kboe/d, following value-led short-cycle wells and optimisations.
2026 production guidance is 120-130 kboe/d, pointing to stability at an elevated base as those late-2025 volumes roll through the full year.
West of Shetland: Rosebank on the home stretch; Cambo edges to FID
Rosebank remains the flagship. Subsea installation progressed in 2025, the FPSO sailed from Dubai after major refurbishment, and the plan is to moor, hook-up and commission ahead of first production in 2026/27. Further environmental information has been submitted and consent is awaited. Execution discipline in this final phase will be key for schedule and cost control.
Cambo advanced too. A technical refresh delivered optimisations and risk reductions; tenders for the FPSO EPCC and subsea EPCI have been run; and an updated Field Development Plan and Environmental Statement were submitted in Q1 2026. The farm-in process has been reignited, with a view to securing a partner ahead of a potential FID in 2026/27.
Elsewhere, Fotla and Tornado have Field Development Plans in, while the 50% Tobermory farm-in and progress at Suilven strengthen a potential northern gas hub strategy. The theme is consistent: turning a large resource base into long-life, lower-intensity production with shared infrastructure.
M&A and hedging: accretive deals, de-risked cash flows
Ithaca executed two sensible bolt-ons: an extra 15% of Seagull from JAPEX UK and 46.25% of the operated Cygnus field from Spirit Energy. Headline valuations were approximately $10/boe (excluding tax losses) for Japex E&P UK and $7/boe per 2P reserves for Cygnus. Together they added near-term production, cash flow and reserves, and deepened positions in assets the team already knows well.
On hedging, the group booked $184 million of hedge gains and finished Q1 2026 with 63.8 mmboe hedged to the end of 2027. For 2026, more than 80% of oil is swapped around $67/bbl, with some collars participating up to about $90/bbl, and gas retains upside with a meaningful portion unhedged or in collars up to 130p/therm. That mix aims to lock in cash flow without capping all of the upside.
Costs, taxes and the policy backdrop
Adjusted net operating costs were $817 million, and adjusted unit opex ran below $19/boe, helped by scale and reliability improvements. Group cash tax paid was $263 million, relating solely to the Energy Profits Levy (EPL). A non-cash deferred tax charge of $327.6 million, triggered by the extension of the EPL to March 2030, flipped the bottom line to a reported loss of $84.1 million despite a $840.3 million profit before tax. Adjusted net income of $289.2 million better reflects the underlying performance.
Regulation may be stabilising. The government’s proposed Oil and Gas Price Mechanism sets higher price triggers ($90/bbl oil, 90p/therm gas, inflation-adjusted) for “windfall”-type taxation. It is not law yet, but it is directionally helpful for long-term planning and investment decisions.
ESG metrics also improved: zero Tier 1/2 process safety events and a drop in greenhouse gas intensity to 17.2 kgCO2e/boe from 23.9, aided by portfolio mix and targeted decarbonisation projects.
2026 guidance and what to watch
- Production: 120-130 kboe/d.
- Net opex: $820-860 million; producing asset capex: $600-700 million.
- Rosebank capex: $280-320 million in the final development phase.
- Decommissioning: $170-210 million; cash tax: $290-340 million.
- Dividend: 30% of post-tax CFFO targeted at $470-520 million.
My take
- Positive: Higher production base, lower unit costs and bigger dividend policy – all backed by strong liquidity and prudent hedging.
- Balanced: Reported loss is accounting-driven; the cash engine looks intact. 2026 guidance is sensible rather than heroic.
- Watchpoints: Rosebank execution and consent, Cambo farm-in and FID, delivery of Cygnus infill wells, and any twists in the EPL successor regime.
Net-net, Ithaca exits 2025 as a larger, steadier cash generator with clear near-term catalysts. If Rosebank lands on time and Cambo secures a partner and moves to sanction, the medium-term growth runway lengthens – and the upgraded dividend framework suggests shareholders will be paid to wait.
