Ithaca Energy plc (ITH) Earnings Call Transcript & Summary

Welcome, everyone, to the Ithaca Energy Analyst and Investor Webcast April 2024. My name is Harry, and I'll be your operator today. [Operator Instructions] It's now my pleasure to hand you over to Gilad Myerson, Executive Chairman, to begin.

Good morning, everyone, and thank you for joining the webcast. We're very excited to announce the combination of Ithaca Energy and ENI UK oil and gas assets, really creates a fantastic combined company, and the purpose of this podcast will be to walk you through the business combination and answer any questions. If you look on Slide 4, you'll see myself, Gilad Myerson, the Executive Chairman of Ithaca. And Iain Lewis is also on the call, who is the interim CEO as well as the CFO of the company. Moving on to Slide 5. The combination really creates a powerhouse in UK. We're talking about pro forma production of over 100,000 boe/day. This is a significant scale. We've become the second largest independent operator in the UKCS. We have stakes in 6 of the 10 largest fields and also we will be the largest operator in the UK continental shelf by production in 2030, and we already have the longest reserve and resource base, talking about 658 million barrels of oil equivalent. So really, we're talking about a company with significant scale. The second point is about the agility of an independent and the capability of a major ENI are fully committed to the long-term growth of the company. This is part of the satellite model. They've done this with Var Energi in Norway. They've done this with Azule in Africa, and this is an additional satellite of ENI. It really helps us as a powerhouse in the UK, we'll be able to tap into the entrepreneurship with Ithaca, the agility of Ithaca as well as the band strength and the experience that ENI brings. The third point is around the cash generation of the combined entity. We're talking about a company with significant cash generation, 100,000 barrels of oil really drives a lot of cash that we can then use for developing assets or acquiring assets as well as for providing attractive dividends to our shareholders. And we have an ambition to distribute $500 million in '24 and another $500 million in 2025 in the short term. The next point is around unlocking potential for long-term organic growth. Obviously, Cambo is a very exciting asset that we're very keen to develop and happy to share more about it. I'm sure there'll be quite a few Q&A around Cambo as they always are in these calls. And with the combination of ENI, it simply allows us to look forward and potentially sanction Cambo, but for Cambo, we also have additional organic opportunities like so Fotla, Marigold and other assets that we're looking forward to developing. ENI want to again bring significant strength, which allows us to develop these assets. And then the final point is inorganic growth. We have been looking at opportunities outside of the UK as well as in the UK and the combined balance sheet allows us to progress with potentially larger acquisitions and additional opportunities to grow the company further. So overall, very excited about this business combination. Moving on to Slide 7. This is just a snapshot of the company, 37 producing assets. It's a very, very well diversified portfolio, the likes of Rosebank and Cambo in terms of drilling fields but also production. We have Captain, we Fotla, we have Mariner. We have Cygnus now. We have Elgin-Franklin, a much larger stake in Elgin-Franklin. And with interest, we have 50-50 gas and oil with a very significant 2P and 2C, which gives us a significant RP ratio of 15 years. So really, this is one of the most attractive comp companies in the UK. Moving on to Slide 8. The picture over here is of ENI satellite model. They use this in their investor presentation, and I'm sure they'll be talking about the satellite model in the context of this transaction as well. Ultimately, they have decided to create these satellites where they have businesses without efficiency scale to be managed centrally and therefore they decide to move them outside, but they want to maintain access to the assets. And therefore, what we're getting with this combination is we're getting significant financial strength, both in terms of balance sheet, but also just in terms of overall expertise in terms of world-class technical capabilities, they've done a lot more development, of course. Also the exploration recently has been superb. And we'll be able to access those technical capabilities. And then finally, they see this as a long-term commitment. They're fully committed to growing Ithaca Energy as the UK satellite, and we're very keen to be partnering with them on this journey. In terms of the transaction itself, I'll hand over to Iain to walk through the details.

So on Slide 9, we have a summary of the transaction and how this is going to work. Really important to know this is a business combination. Lots of the press this morning. We've been seeing it as an acquisition, but it is really a partnership and the combining of 2 businesses and really a large-scale holding by ENI, but still material and large shareholder of ENI as the bringing together of businesses. You can see on the right-hand side of this chart that the merger ratio is to 8.5%. That's in line with the range that we announced at the exclusivity announcement. There is a requirement to keep a 10% free flow. So there will be a sell down prior to completion to maintain that. And you can see on the right-hand side the post sell down holdings in the combined new business as our completion. There is a shareholder vote, as Gilad said, there's undertaking by Gilad to support that. And therefore, the process will evolve a circular on a prospectus, but it is a clear commitment of the 2 large shareholders to complete this deal and bring this partnership together. The directors of the company, there will be 2 nominated directors from ENI. We'll also be the appointment of CEO, which was part of our current search for appropriate CEO to take us forward, and ENI will nominate the first CEO of the combined business, again, giving an experienced upstream professional from a large corporation to help us on the path forward. So we're very excited about the combination about the structure and how we move forward together. Slide 10 really starts to get into some of the details around those 5 key points that Gilad has taken you through already in the subsequent slides, we'll just walk through some of the detail on that and drill down. But the size issue, the scale issue that this gives us as a combined business is clear in terms of the fields and the production that we have relative to others in the basin and on a stand-alone basis. That ability of an independent capability of a major point is hugely valuable for us going forward. It gives us depth and it gives us technical expertise that is enviable for an independent oil and gas company. Materiality of the cash flow allows us to do what we always said we would do at IPO. We said we wanted to grow the business, and we want to return to shareholders. The changes around EPLI really made that more difficult and really stressed and challenge that objective. What this deal does is enables us to really deliver on those expectations for shareholders with strong cash flow and dividend potential. And as Gilad said, it unlocks opportunities both the organic growth opportunities on the inorganic due to the debt capacity and the technical access that we have through the combination. Going down through a few of the more specifics on Slide 11, a bit of a snapshot of where we are pro forma production in 2024 of 100,000 to 110,000 barrels a day. You can see with that fits in terms of the combination. Clearly, the fifth largest or outright second orders independent and really getting very close to BP, Shell and Total as majors in the basin. So scale that's clear in current production. In terms of the potential of the business, we have the largest pro forma on risk production by 2030. As you can see, the extension of Cambo together with the ENI field enables us to be clearly a large part of the basin. Slide 12, again, just doubles down on that in terms of resources likely to be developed. You have on the left-hand side there, our external view of where we are materially larger than anyone else in terms of likely maybe develop resources. Out on the right-hand side, you have 6 of the 10 largest assets in the UKCS, we are in high-quality, high-margin, long-life assets underpinning the quality of the business. On the next slide, you'll see the satellite model that has been referred to Slide 13. And you can see what has happened with Var is really what we're looking to happen here what ENI view of Ithaca's future and ours combined. And it's about growth and return. So this model of oil and gas upstream delivery of growth to value and returning via dividends that has been in the story of far and it's what we committed to do at IPO. And this model has helped us achieve those objectives. So you'll see through right, and you'll see in the announcements we've made yesterday last night, that we have strong plans for returns to shareholders and the partnership with ENI enables that to happen as well as growing the business. Slide 14 is the summary of our guidance for 2024. You'll see on the left-hand side, the 2024 guidance that we gave a few weeks back, and that is maintained and held. What you have on the right-hand side is combined guidance. Now critical to understand that the economic effective date of this transaction is 30th of June. So the assets from the ENI portfolio come into the business effectively economically at that date. So the closure will be in Q3 or maybe into early Q4, but that's not impacting the economic effect of transaction it will be from 1st July. So that's how you get to these combined guidance numbers. We are, for the full year of 2024 with Ithaca's base portfolio for 12 months, the ENI UK assets for 6 months. We get a combined 2024 guidance of 80,000 to 87,000 boepd a day, $650 million to $730 million OpEx, $410 million to $480 million producing asset CapEx and then the Rosebank CapEx and cash tax position laid out as well. So again, as we've done before, a clear transparent guidance that enables investors to understand the figures and to understand where our business is expected to evolve to during the year. Slide 15, just to underline this material cash flow generation point, what this enables us to do 2024 production shows a 43% increase in itself, and that's with just the 2 additional production. But you can see the potential here around the synergies operationally and then financially, we're now in a business post-close that has significant material diversity of production across both gas and oil assets. It has a range of operating cost per barrel, but trending lower, so that we are expecting to get down towards the low $20 per barrel and pushing that as low as we can in the medium term. There are financial synergies around the scale, the scale and debt capacity. These assets are being injected by ENI with no debt. So it's debt-free. So they will come across with significantly increased debt capacity. We already had significant liquidity in the business, over $1 billion at the year-end of the currently available. This just extends that further. It improves our credit rating. We're expecting to move towards BB as we move through the rating assessments, push this deal and as we've said before, it's a path to investment grade that we're looking to move through, and this takes us 1 big step on the journey towards that. On the right-hand side, in terms of the summary of what this allows us to do, it's immediately accretive to EBITDAX, cash flow on profit per share. So it is supportive of our shareholder value through it. And that's reflected in the dividend policy, where we maintain our 15% to 30% post tax cash from operations. But then are looking to in 2024 and 2025. We have an ambition to raise that beyond the 30% to get up to $500 million per annum. Now how can we do that? Slide 16, we come back to the capital allocation framework. And this underpinned the IPO story, underpinned our investor commitments, and we are redoubling our emphasis on it as part of this deal. This is entirely aligned with our strategy. It is an appropriate and high-quality response, we believe, to the EPL introduction, and it resets us on the journey to deliver what we said we'd deliver. So just to remind everyone, we said at IPO that we would take the cash from operations and through this capital allocation framework, we would invest, protect, return and evolve, investing to maintain and sustain our production, that's able to be reset today as part of the deal to 100,000 barrels a day. So that's our aim is to spend CapEx, first of all, to sustain production at 100,000 barrels a day, and we have the ability to do that out to the next 4 or 5 years with just the base investments that we are already involved in our business. So that's the first cut of cash flow to sustaining CapEx. Secondly, protect balance sheet, and we committed to a 1.5x net debt to EBITDAX with the enlarged business with the new assets that come in unlevered, we, at the end of '23 on a pro forma basis or something like 0.2x net debt to EBITDA. So significant headroom to get -- to keep below that target and substantial leverage capacity in the business that gives us optionality. Thirdly, we committed to return 15% to 30% post tax cash from operations. We did that in 2023. We committed a $4 million dividend. That was exactly as it turned out, 30% post-cash tax from operations. You could say that our financial planning and forecasting was excellent. So that was the number we landed we committed to and we delivered at the last transfers paid on the 17th of April. What we've been able to do as part of this deal is to extend the commitment at the top end of the range of [ Break ] post that cash from operations that we commit to delivering us in '24 and '25. So that range, which is our medium-term policy. We're able for '24 and '25 to pin ourselves at the top end of that range of 30%, but then the cash flow beyond and this is where we get into, and we've always said it was either grow, extend our yield. And what we're seeing as part of this deal is that we are looking to yield additional distribution to shareholders via special dividends to get up towards $500 million per item '24 and '25. So that's the ambition, and we're working hard towards that. But we expect to have substantial capacity beyond that in terms of growth CapEx or M&A. And as Gilad has mentioned, Cambo is a large part of that and possibility and option in there, but there are many others as well, and we are active in the M&A review from continually. So again, just reconfirming this is what we said we'd do, and we're doing it. And the story is around growth, sustaining our position, growing our business but also yielding material dividends to shareholders. That's what we heard at IPO from our investor base, and that's what we continue to seek to deliver. Slide 17 gives us the scale concept around this business, and you'll see in the blue, the combined reserves, the 2P reserves for the business. And you can see that, that is above 100,000 flat out through 2028. There are smaller straightforward tiebacks that add material production also like a [indiscernible] development, which is moving through approval hurdles. That is a position that we expect to deliver. And then we have growth beyond. So there's the Cambo resources, but also numerous projects beyond in the base portfolio. This is within our portfolio. It's with our graph, so of course, the M&A options that lie beyond. So scale production with material upside opportunity and growth potential, which was always the story that we believe then and we are seeking to deliver. The third point in terms of inorganic growth, this is -- this whole deal is aligned with our Buy, Build, Boost strategy. The Buy optionality is there. We have a partner with us now with deep technical expertise with global reach and global understanding. In terms of the M&A use that we've been taking and looking at in assets, the partnership with ENI will be hugely helpful. In terms of the Build aspect, we've mentioned already, there's the ability to accelerate portfolio development. We will do that in the right way with the right decision-making and through the fiscal regime lens as that evolves, but we have the capacity and the optionality now to do that. And that's the key thing here. It gives us scale and optionality and flexibility as we look to the future. And then we have the ability to boost our assets through bringing in experienced operational expertise from the ENI business as well and technical services access. So all in line with our strategy, all in line, what we said we do at IPO. And we think a very strong investee to our investors that their investment is going forward in line with the business case outlined at IPO. Slide 19 gives you the outline of the time line to completion. We've been working on this deal for some time through the process of being able to announce it in April. We are now pressing on to the completion of the prospectus because we're issuing shares on the cost transaction circular looking to publish that around the middle of the year. We have shareholder meetings around the same time. As has been said, the like have given already a removable commitment to vote for the deal. We obviously are nearly 90% shareholder at the moment. So that's the structure. And then there's what is pretty customary regulatory and government approval is expected with targeted completion in Q3, but effective economic date continues to be 1st July. Okay. Going back to you for Slide 20 in conclusion.

Very good. Thanks a lot, Iain. So yes, we're very excited about this business combination. We're excited about the scale. We're excited about the agility and the capabilities that Iain and I bring to the table. We're very excited about the combined cash flow generation of the business. We're very excited about the growth, both organic and inorganic opportunities, and we feel this is a significant step. If you think about the history of Ithaca, really the first major transaction was the Chevron transaction, which significantly grew the business. Then we had the Siccar Point after we've done Summit and Marubeni, which were more bolt-on acquisitions, really Siccar point enabled us to have a resource base, which was enviable to many with Cambo and Rosebank as well as other opportunities than we IPO the business. And really, this is the next phase of growth and we believe this business combination will really turn as Ithaca came to the premier player in the UK. With that, I'll pause and hand over to the floor for any questions you may have.

[Operator Instructions] Our first question today is from the line of Werner Riding of Peel Hunt.

One of the features of the deal stage that you maintain a largely unlevered balance sheet. But I was wondering, when you look forward, where does your maximum pro forma leverage ratio go to? I'm thinking perhaps in the event, you FID Cambo, but you perhaps aren't able to farm it down and you've got to fund 100% paying interest on CapEx. A few moving parts there. But what's the possible maximum leverage ratio?

So we haven't changed our policy. Our policy is 1.5x. And ultimately, these combined businesses, if you just look at the EBITDA of Ithaca last year as well as the EBITDA of ENI. We're talking about significant EBITDA and our net debt is very low. And therefore, we have quite a bit of room to lever up and still be below the 1.5x threshold. So we don't feel there's -- it's necessary to change the current guidance to market. We believe we'll be able to provide the dividend as well as develop the assets. The big caveat is, of course, the labor policy. We just need to understand exactly what they may be doing to energy profit levy, but all else stable. I think we're pretty comfortable with the guidance as it is at the moment.

Okay. And actually, you sort of touched on what I was going to move to next actually, but just the timing sensitivities around Cambo FID with bearing in mind the upcoming election, does it have to be sanctioned during the current government to progress and as it is then perhaps runs the risk of being shelved almost indefinitely under labor government or is that too pessimistic?

No. So we have some time. So we received the license extension just a month ago, and now we have until -- we essentially have 2 years to sanction the project. So it will go into the next government. Ultimately, the government that comes in will need to decide do they want to import hydrocarbons or produce hydrocarbon themselves. And if we look at the impact of importing, it comes at higher emissions, higher cost, less jobs, lower tax collection. And therefore, we believe the next government will be constructive towards development. We heard just 1.5 years ago, we heard relatively strong statements from the conservative against development, but then that's rapidly changed when they realize the benefit to the economy. And we believe that the new government will also be relatively constructive towards new developments. But I think at the moment, we're still in a bit of a situation where it's all about the votes ahead of the elections. And therefore, the statements are not fully clear exactly what they're planning to do. Therefore, I think post-election, we'll be -- we'll have a much clearer view of the overall support of the new government.

Just to add on Werner, those points. I mean I think the clear commitment here is to only commit to CapEx that's within our policy of the net debt range of 1.5 ceilings. So that's, I guess, a clear. But in terms of the government's position, as Gilad said, this will evolve. And we see it evolving in Europe right now. I mean the LNG, the carbon tax and LNG coming into Europe is the first sign that people are starting to recognize that this is a global hydrocarbon industry and just us not emitting or producing oil and gas is not sufficient, and we have to look more broadly. We're making that case strongly that the government will continue to do so. Success will prevail. We believe in this will up.

Our next question today is from the line of Sasikanth Chilukuru of Morgan Stanley.

I had 2, please. The first was related to CapEx. You highlighted production to be in a bit above 100,000 barrels per 2020 was just wondering if you could comment on the average CapEx required for the company as well. The second one was again coming back to Cambo and the farm down. Just wondering if you're still actively pursuing farmed on so is this transaction -- does this transaction have any bearing on the expected time line for the farm down? What's the progress there?

Yes. So let me take the first one and then pass to go for the second one, Sasi. So in terms of CapEx, there's -- I think the guidance is [indiscernible] the presentation probably helps get you in a [indiscernible] essentially, the portfolio that comes in from ENI is relatively low CapEx. So the sustaining capital spend is relatively low. You can see that from the numbers that are added in for '24. And in fact, '24 CapEx here includes Seagull project cost final wells. So there's kind of one-off CapEx in there as well. So in terms of sustaining CapEx on Cygnus, Elgin-Franklin and J area and Seagull is relatively low. So no really material change from our own kind of net producing asset CapEx. And of course, the big project is Rosebank in the moment. So I am seeing, CapEx, that's the kind of a lot of things on there. You're at a fairly small increment to our current base CapEx, just why this is highly cash in the short term. Gilad, Cambo.

Yes. Thanks, Sasi. On Cambo, we don't need to farm down at the moment, but we will look for a partner. We started a process a few months ago, and we did get some interest in Cambo, now obviously with the business combination, the 3 companies coming together, we have the balance sheet to progress should we decide to do so. But we think that it would make sense to bring in another partner if we can find someone who we think is a good partner to the project.

Next question today is from the line of Matt Smith of Bank of America.

Congratulations on completing the deal. I guess I wanted to come back to -- you talked about growth in the company, which has always been the plan since IPO, as you alluded to. I just wanted to sort of see where you saw the growth engines from here. And I guess what I'm really asking is how high on the list of priorities, would inorganic remain to be post this transaction because you obviously have options within the portfolio for inorganic growth, but perhaps you sort of alluded to the fact that potential fiscal changes could perhaps impact the likelihood of Cambo progressing or not. So I suppose that's a moving piece, but I really just wanted your sort of update on where you saw the growth engines for the company, how much of an M&A-led strategy, you expect this to be going forward? And then the obvious follow-on to that was just where are we looking at Ithaca Energy being a UK pure play? Or do the option sort of still remain open to also diversify it outside of the UK basin, please?

Yes. Many thanks, Matt. In terms of growth, we are looking to opportunities both within our portfolio organic growth as well as we're looking for acquisitions and within acquisitions, the opportunities in the UK and opportunities abroad, and then we walk you through those 3. So in terms of organic growth, ultimately, we believe that the project that we currently have are very attractive, provide significant returns once again, subject to potential fiscal changes. And therefore, we would like to progress with these projects. When we met before the IPO we were very keen to progress all of the organic projects in parallel, right? We're talking about doing Cambo and Rosebank and Marigold and Fotla. But due to the EPL, we've had to slow things down quite considerably. So we progressed with Rosebank, and we would like to progress with Cambo now, now that we have this partnership with the ENI. We do believe that we need to make sure that we're very prudent and are thoughtful around potential fiscal changes with the new government coming in, and therefore, we are looking to speaking to current government as well as potential future contenders in order to understand how they see developments as core to UK's energy security going forward. So that's on the organic side of things. What we don't want to do is we don't want to stop and wait and therefore, we're looking at inorganic opportunities as well. There are some assets that are going to be coming to market very soon in the UK that we think we're the natural -- a natural owner for those assets with the larger scale, it makes the acquisitions even more attractive. So that's opportunities in the UK and then opportunities abroad. We've actually been looking at opportunities as the Board. We've decided not to make any acquisitions, looking at the likes of Norway, Netherlands, Denmark. There's quite a few operational synergies in the North Sea. But at the moment, we haven't found the right fit in the meantime. So it sounds like we attest all of those 3 opportunities, but we're exploring we haven't made any big decisions over the last 1.5 years because of the fiscal environment. And therefore, we're trading quite carefully.

And perhaps just 1 follow-up on that second point, if I could. Just so whilst you sort of do still continue to scan international markets if there were to be a deal down that avenue, would we expect it to be relatively close to home then closer to the UK North Sea, if at side? Or is everything on the table in that regard, of course, dependent on finding the right opportunity that is?

Yes. Really, it's about value creation and that value creation needs to come from an opportunity which is mispriced, and we believe that we will be able to create significant value. The UK is obviously -- that's why our first priority is in the UK simply because we understand the basin we know the asset -- by now we know all the assets in the UK pretty well. We did it in the mall. We have a lot of fiscal synergies, operational synergies, and therefore, it's the easiest. Norway, Netherlands, Denmark, the operating philosophies are very similar. And therefore, we believe that we may be able to bring quite some operational synergies, obviously, different jurisdictions. So the fiscal synergies and other types of synergies get lost when you go into a new jurisdiction and then going to the likes of Gulf of Mexico at slightly further move. So really, the primary lens that we use is value creation, wherever we believe we'll be able to add value, we're happy to explore and therefore, naturally closer is easier to add value than further.

Our next question today is from the line of James Carmichael of Berenberg.

James Carmichael from Berenberg. I was just wondering, just a couple of questions. If you could maybe give a bit more detail, quantify some of the financial synergies from your deal, how we should think about OpEx going forward? Or wherever those synergies have come from? And then thinking about the organic growth opportunity set, I guess, at the time of setting this year's guidance, partner appetite to invest was obviously flagged as an issue. So just wondering sort of how much of the combined 2C resource base will be operated and how much control you've got on delivering that 2030 ambition? What's the risk of partners slowing that down?

Yes. So in terms of the, on the first one here. So in terms of the synergies, so we haven't given specific numbers, I guess quite normal, I guess, in deals like this. There are a range of synergies across the transaction. Clearly, we're bringing together operate assets from our side with the Cygnus assets. So in terms of supply chain contracts and interactions that that will bring additional scale, which is part of what we've been doing here, integrating the Chevron assets in 2019. So their ongoing supply chain synergies that I expect. There will be synergies around the financials. There are some tax synergies associated with most UK deals and bringing together a bigger company with capital expenditure, shelter, et cetera. They'll be financing synergies in terms of the cost of debt, which we expect to reduce and footprint synergies around infrastructure, et cetera. So there will be a range of synergies that will all add up to a material number. In terms of the 2C resources, and I think in the current organic portfolio, the largest assets are Cambo and Fotla in terms of 2C there is 100% Ithaca. So obviously, there are a range of other projects with different equities, but those 2 in terms of 2C resource base, those are the 2 largest and our 100% Ithaca. We're entirely in our control to farm down the move forward, as Gilad has mentioned.

[Operator Instructions] And our next question is from the line of Chris Wheaton of Stifel.

Great. Two questions for me, if I may, please, on the structure of the deal. I'm interested in why ENI chose you had other options to sell its UK assets, I would have thought the obvious one would be to inject the assets into NEO Energy given the partnership with high-tech vision just as you've got with Vår in Norway. So I'm interested in what you think you bring to ENI that made this deal the right one and therefore, potentially maybe future asset injecting from ENI into Ithaca? Secondly, I'm interested why debt -- why equity not debt because you've not been afraid of that of using debt in the past to great advantage to shareholders? And certainly on my numbers, a reasonable commodity prospect, you would have peaked at around 1.7x net debt to EBITDAX and you've done this deal entirely in debt. So that's not very much above where your debt ceiling is. I'm interested why you -- why then the structure of the deal is 100% equity and loss of debt component as well indeed all debt? I'd probably stop there for a moment.

Christopher let me take the first one and then Iain, you could pick up the second. In terms of why, Ithaca is not, it's a question to ENI, not so much to us. They had been considering multiple opportunities in the UK. If we just look at other deals that they've done, they really are focused on growth. They've done a lot of exploration recently, had some very successful discovery. They've also done quite a few developments and are in the midst of developing some big fields Ithaca are from the discussion -- the initial discussions if you had with them, they very much like our approach. They like Rosebank and Cambo, Marigold, Fotla, the other potential opportunities West of Shetland. And when they think about Ithaca the combined entity, they think about a company that will be the largest producer in the UK in the future. So it's very much a long-term view. And if you look at Ithaca compared to other independents in the UK, we are very different because we have a relatively stable production phase and then starts to grow with the large projects and very few other companies offer that same long-term prospects. So I think that -- I imagine that, that -- they would say that will be the #1 priority. Then, of course, you have just a track record of growth and agility of the organization. But really, I would ask them that question. On the equity, not debt. Iain, over to you.

And I think actually, the intentions of you and I here play into this as well, right? Because this is not a sale, it's not an acquisition. It's a combination. And you could ask you directly will these other would be for sale. They were not interested in selling from restarting. It was an integration a business combination that brings them into the satellite model that's been very successful are, therefore, raising debt to buy these assets, I don't think it would have been even a possibility. These are the right assets in terms of fit with our current business. This is the right combination, we believe, in terms of the overlap of portfolios. And yes, I presume you and I saw that, too, but also the willingness of a listed company, which we are gives the opportunity to evolve the company. Not every company obviously is listed and has that structure from a government perspective and also from a market access perspective, that sets us up to go forward with a large scaled company with the commercial and the technical capability of ENI behind us. So that's I guess why equity in terms of -- also in terms of what we believe is a stock position in the UK for oil and gas companies and ourselves, particularly, we don't believe is necessarily reflecting underlying net value they're bringing together of 2 UK asset-based companies where that market view, if you like, is reflected in both asset basis, the 38.5% relative now view that we've taken together with Eni and Ithaca brought together, we believe, then brings the synergies on the scale, which enables us to move forward on a strong basis on -- with the leverage capacity enhanced materially. So if we've done this deal by debt, we would then be having to pause in terms of growth. We have difficulties, I would suggest the level of returns that we're going to make, whereas this enables additional growth and returns, which is the aim of the transaction.

We have no further questions in the queue at this time. So I would now like to turn the call back over to Gilad Myerson for any closing remarks.

Yes. So thank you very much for joining this call. We're very excited about this transaction, really, it takes Ithaca to a much larger scale, and we believe that we'll be able to continue adding significant value over time. As always, if you have any questions, feel free to reach out to Iain or myself or Katherine, and we'll be happy to address any of your questions. Thank you so much.

This will conclude today's call. Thank you all for joining. You may now disconnect your lines.