Ithaca Energy Reports Strong 2025 Results, Raises Dividend Policy and Advances Key Projects

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.