Ithaca Energy Reports Robust FY 2025 Results, Reaffirms Dividend and Boosts Production

Ithaca Energy’s FY 2025 Trading Update: Big production step-up, costs down, dividend on track

Ithaca Energy has posted a robust FY 2025 trading update, and it reads like a company that’s scaled up and tightened up at the same time. Production surged, costs fell, the balance sheet looks solid, and the dividend story is intact. The Group exits the year with a higher production run-rate and a chunky hedge book to steady cash flows if prices soften in 2026.

Here’s what stands out for investors: average production jumped to 119 kboe/d (thousand barrels of oil equivalent per day) from 80 kboe/d in 2024, adjusted preliminary EBITDAX rose to $2.0 billion from $1.4 billion, and net unit operating costs dropped to $19/boe. Safety and environmental metrics also moved in the right direction, which matters for continuity of operations and licence to operate.

Key numbers at a glance

Average production (2025)	119 kboe/d (2024: 80 kboe/d)
Exit rate	\~148 kboe/d; peak daily >150 kboe/d
Adjusted preliminary EBITDAX	$2.0 billion (2024: $1.4 billion)
Net operating costs	$817 million; $19/boe (2024: $22/boe)
Hedge position (31 Jan)	43.8 mmboe hedged (c.58% oil / c.42% gas); oil swaps >$66/bbl; gas swaps 92p/therm
Leverage	0.56x
Available liquidity	$1.5 billion, incl. $1.3bn undrawn RBL
Cash tax paid	$263 million (below $270–300 million guidance)
Dividends	$500 million declared in 2025; $200 million expected to be declared with FY 2025 results
2P reserves / 2C resources (prelim.)	Over 350 mmboe / over 300 mmboe; 2P replacement >130%
Producing asset capital cost (2025)	$629 million (lower end of $630–670 million guidance)
Rosebank capital spend (2025)	$224 million (below $230–270 million guidance)

Operations: higher volumes, strong exit rate, safer execution

Average production hit 119 kboe/d in line with upgraded guidance of 119–125 kboe/d, despite “unprecedented” turnaround activity. The exit rate came in at around 148 kboe/d with a peak of over 150 kboe/d, helped by new wells at Cygnus, Seagull and J Area. That sets a higher starting point for 2026.

On safety, the “perfect day” strategy appears to be working: zero Tier 1 or Tier 2 events were recorded, alongside reductions in the Total Recordable Injury Rate (TRIR) and greenhouse gas intensity from 2024. That reduces operational risk and supports uptime.

Costs and cash generation: EBITDAX up, unit opex down

EBITDAX – a cashflow proxy that strips out financing, tax, non-cash charges and exploration expense – hit $2.0 billion, up from $1.4 billion. The operating cost story is just as important: estimated net operating costs of $817 million equate to $19/boe, down from $22/boe in 2024, showcasing better margins from the enlarged portfolio.

Cash tax paid was $263 million, below the $270–300 million guidance range, and leverage is low at 0.56x. Available liquidity of $1.5 billion includes a fully undrawn $1.3bn Reserve Based Lending (RBL) facility – a debt line secured against reserves – giving Ithaca Energy room to fund capex and M&A without straining the balance sheet.

Hedging: meaningful protection into 2027

Hedges matter in choppy markets. Ithaca closed January with 43.8 mmboe hedged into 2027 (about 58% oil, 42% gas), with average oil swap pricing above $66/bbl and gas at 92p/therm. Management says this protects 2026 cash flows in an anticipated weaker commodity price environment.

My take: this is sensible risk management for a large dividend payer, though it naturally caps some upside if prices rally. The current book looks balanced enough to underpin the dividend and capex plans.

Reserves, resources and growth pipeline

Preliminary 2P reserves (proved plus probable) are over 350 mmboe, with 2C resources (best estimate contingent resources) over 300 mmboe as at 31 December 2025. The 2P reserves replacement ratio was over 130%, implying Ithaca added more proved and probable reserves than it produced, via both organic activity and acquisitions. The RNS also notes “2024 2P Reserves and 2C Resources: 657 mmboe.”

Strategically, Ithaca continued consolidating in the UK Continental Shelf (UKCS). Acquisitions from JAPEX and Spirit Energy added about 17 kboe/d proforma 2025 production in familiar, quality assets (Seagull and Cygnus). On the West of Shetlands front, Rosebank progressed with estimated 2025 net spend of $224 million, below guidance, and the FPSO (floating production, storage and offloading vessel) sail away is expected in Q1. Ithaca also farmed into Tobermory in Q4, signalling continued maturation of the area strategy.

Dividend: commitment reiterated, but wording needs watching

Dividends are central to the equity case. The Group highlights an accelerated second interim dividend of $133 million paid in December, and says this took “total cash distributions declared in 2025 to $500 million.” It also “reaffirms total dividend target of $500 million for FY 2025 with $200 million expected to be declared on FY 2025 results.”

There is a potential timing nuance here. The RNS contains both statements, which could be interpreted as either: (a) the $200 million forms part of the $500 million target but is due to be declared with the FY 2025 results in late March, or (b) an inconsistency in phrasing. We’ll get clarity at the results, but the signal is clear enough: Ithaca remains committed to a substantial dividend around the $500 million mark for FY 2025.

Capex discipline and portfolio optimisation

Estimated net producing asset capital cost was $629 million, at the lower end of the $630–670 million range, focused on high-return wells and reliability enhancements. That supported the production uplift and better unit costs. Rosebank spend came in below guidance too at $224 million, with a key near-term milestone (FPSO sail away) flagged for Q1, keeping the project on a path towards first production.

Why this update matters for investors

• Operational momentum: Higher exit rates and new wells suggest 2026 starts from a stronger base.
• Margin resilience: Lower unit opex at $19/boe indicates improved netbacks, especially helpful if prices soften.
• Balance sheet strength: 0.56x leverage and $1.5 billion liquidity provide flexibility for capex and M&A.
• Hedge cover: 43.8 mmboe hedged into 2027, with oil >$66/bbl and gas at 92p/therm, supports cash flow visibility.
• Growth pipeline: Reserve replacement >130%, UKCS consolidation, and West of Shetlands progression keep the medium-term growth case intact.
• ESG and reliability: Zero Tier 1/2 events and improved TRIR and GHG intensity reduce operational risk.

Points to monitor next

• FY 2025 results in late March 2026: Full audited numbers, 2026 guidance, and a Competent Persons Report (CPR) from an independent reserves auditor.
• Dividend declaration details: Clarification on the $200 million expected at results and how it aligns with the $500 million target.
• Rosebank milestones: Confirmation of FPSO sail away in Q1 and schedule towards first oil.
• Hedge evolution: Any further layering given market volatility and pricing.

Bottom line: a scaled-up, cash-generative platform with defensive cash flows

This is a strong trading update. Production is up, costs are down, safety is improved, and the balance sheet looks ready for more growth. The hedge book provides a cushion for 2026, which supports the dividend and capital programme, albeit with some upside capped if prices rally.

On the mildly negative side, the dividend wording could be clearer, and we await full audited detail and 2026 guidance. But the direction of travel is positive: Ithaca Energy is operating at a higher level and looks well placed to keep funding growth and shareholder returns from a stronger base.