Ithaca Energy (LON:ITH) reported record quarterly production in the second quarter of 2026 and raised its full-year dividend guidance, citing lower operating costs, strong cash generation and continued production momentum following weather-related disruption earlier in the year.
Executive Chairman Yaniv Friedman said the company’s Q2 production averaged 131,000 barrels of oil equivalent per day, while first-half production averaged 128,000 boe/d. He said production had recovered strongly from the turnaround season and was continuing into the third quarter, though the company still expects the planned impact of maintenance activity during Q3.
Costs Fall as Cash Flow Remains Strong
Chief Financial Officer Iain Lewis said first-half operating costs were $18 per barrel, down from about $22 per barrel in 2024 and below the company’s medium-term aim of maintaining costs around $20 per barrel. Ithaca reduced its full-year operating expenditure guidance, with the midpoint lowered by $20 million.
For the first half, the company reported EBITDAX of $1.1 billion, free cash flow of nearly $500 million, net cash from operations of nearly $1 billion and profit of $127 million, according to Lewis.
Ithaca ended June with $1.9 billion of available liquidity, including $1.3 billion of undrawn reserve-based lending capacity and $571 million of cash. The company also has an untriggered accordion facility of about $400 million on its reserve-based lending facility. Net debt stood at just over $1 billion, while pro forma leverage was 0.49 times at the end of June.
During the period, Ithaca completed a private €155 million tap of its euro-denominated bond at a 5.5% rate. Friedman said the transaction would support growth ambitions and balance-sheet optimization.
Lewis said the higher dividend outlook reflected pricing, cost control and some foreign-exchange support, while production guidance remained unchanged. He said the company was substantially hedged on oil for the next two years and had retained some exposure to higher gas prices, including 30% unhedged gas volumes in the fourth quarter of 2026.
Operational Performance and Safety
Chief Executive Officer Luciano Vasques said operational momentum from 2025 continued through the first half, supported by the company’s focus on safety, production reliability and cost discipline.
Ithaca recorded no Tier 2 process safety events for a 10th consecutive quarter. Its total recordable incident rate was 1.2 cases per million man-hours in the first half, with a rolling one-year rate of 1.7, compared with a UK North Sea basin average of 3.95, Vasques said.
The company also reported emissions intensity of 16.4 kilograms of carbon dioxide per barrel of oil equivalent, below the basin average of about 25 kilograms. Vasques attributed the trend partly to a greater weighting toward lower-emission assets and the retirement of the higher-intensity Alba and Greater Stella Area fields.
At Captain, the C75 well entered production in Q2, while the B-15 well was progressing and expected to begin production in early Q4. Ithaca expects to sanction a two-well Captain subsea campaign during the fourth quarter, with first production targeted in 2028.
At Cygnus, the C-13 well, brought online in May, was performing ahead of expectations, according to Vasques. The C-14 well was spudded and remains on track for first gas in November. Further drilling plans, including the C-16 and C-17 campaign in the Bravo area, remain subject to approvals.
The company also sanctioned a two-well campaign at Elgin Franklin, targeting 4,500 boe/d of net incremental production in 2028. The campaign is scheduled to begin in the fourth quarter, with one well expected online in January and the second in August.
Rosebank Progresses Toward 2027 Start-Up
Rosebank moved closer to first production, with the floating production storage and offloading vessel arriving and being moored at the field in June. Hookup activities are under way, to be followed by commissioning.
Vasques said the operator expects first production in the first half of 2027, with ramp-up to plateau production from summer 2027, subject to regulatory approvals. The drilling rig resumed activity at the end of July following an equipment-handling incident in April, and is focused on delivering the minimum well inventory required for the planned ramp-up.
Rosebank’s 2026 capital expenditure is now expected to be lower than previously forecast because some drilling work, related costs and final FPSO commissioning have been rephased into 2027. Lewis said the lower 2026 spending did not affect the anticipated first-oil timing or the 2027 production ramp-up.
Vasques said Rosebank is expected to have post-tax capital expenditure below $4 per barrel of oil equivalent, declining below $3.50 per barrel with the anticipated high-value H well.
Pipeline, Regulation and M&A
Ithaca said its Fotla, Tornado and Cambo projects have advanced toward final investment decisions. Fotla is moving toward execution after a rig-sharing agreement with Harbour Energy, while Tornado received an 18-month licence extension to March 2028. Cambo, which Ithaca described as the UK Continental Shelf’s largest pre-FID undeveloped discovery, remains targeted for a final investment decision in 2027.
Friedman said the company sees potential to convert 200 million barrels of resources into production through investment decisions over the next 18 months. Ithaca also cited up to 1 billion boe of licence potential, including 660 million boe of 2P and 2C resources.
Management said it remains active but selective on acquisition opportunities. Friedman said potential acquisitions must compete for capital against Ithaca’s organic portfolio and meet the company’s investment thresholds. The company is seeking opportunities that support both growth and yield, while maintaining leverage discipline, financial flexibility and exposure to stable fiscal and regulatory regimes.
On regulatory matters, Lewis said Rosebank’s approval process involved providing Scope 3 emissions information and described the process as relatively straightforward. He added that approvals for wells and field developments remain established regulatory processes, while management emphasized the importance of timely approvals for continued investment and domestic production.
About Ithaca Energy (LON:ITH)
Ithaca Energy is a leading UK independent exploration and production company focused on the UK North Sea with a strong track record of material value creation. In recent years, the Company has been focused on growing its portfolio of assets through both organic investment programmes and acquisitions and has seen a period of significant M&A driven growth centred upon two transformational acquisitions.
Today, Ithaca Energy is one of the largest independent oil and gas companies in the United Kingdom Continental Shelf (the “UKCS”), with stakes in six of the ten largest fields in the UKCS and two of UKCS’s largest pre-development fields.
