Ithaca Energy Limited is pleased to announce that it is to acquire Chevron North Sea Limited for $2 billion. The transaction will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the Company, resulting in an approximately 150% increase in the proven and probable (“2P”) reserves of the Company and a 300% increase in forecast 2019 production.

Pro-forma the transaction, Ithaca’s asset base is estimated to consist of 2P reserves of approximately 225 million barrels of oil equivalent1 (“MMboe”) plus a further 45 MMboe2 of proven and probable contingent (“2C”) resources associated primarily with additional near-field development and infill drilling opportunities. The enlarged portfolio, encompassing 18 producing field interests in total, is forecast to deliver pro-forma 2019 production of approximately 80,000 barrels of oil equivalent per day (60% liquids) at an operating cost of approximately $17 per barrel of oil equivalent.

As part of the transaction approximately 500 employees will transfer to the Company, of which around 200 work offshore on the operated assets.

With the addition of the high quality, long life assets that characterise the CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of the Company and establishes Ithaca as the second largest independent oil and gas producer in the UK North Sea. The transaction provides a material step up in the scale and breadth of the Company’s producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cashflows of the business and enables accelerated monetisation of Ithaca’s existing $2.2 billion of UK tax allowances.

The transaction has an effective date of 1 January 2019 and is expected to complete around the end of the third quarter of 2019 following approval of the acquisition by the UK Oil and Gas Authority. Taking into account the interim period cashflows that are forecast to be generated by CNSL from the effective date, it is anticipated that the price payable at completion will be around $1.65 billion, subject to adjustments for the transfer of working capital.

Ithaca is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group Limited (“Delek”), Israel’s leading integrated energy company. The acquisition will be funded through an upsized $1.65 billion Reserve Based Lending (“RBL”) senior debt facility, a $700 million acquisition debt financing facility, an equity investment by Delek and existing cash resources of the Company. Ithaca’s existing $300 million term loan and associated Delek guarantees will be retired as part of this refinancing.

JP Morgan is acting as financial adviser to the Company in relation to this transaction. The RBL facility has been fully underwritten by BNP Paribas and the acquisition debt financing has been jointly underwritten by JP Morgan and BNP Paribas.

Les Thomas, Ithaca Energy CEO, commented:

“The acquisition of CNSL is a significant step forward in the long term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets.

We are very pleased to be acquiring a high quality portfolio of assets and experienced operational organisation that fits well with our existing business. Like our current portfolio, the production and reserves base is heavily weighted towards operated asset positions, which provides us with the ability to actively prioritise and unlock the full potential of the business. We are excited about establishing an enlarged organisation with a dynamic and innovative culture based on a continued commitment to safe and efficient operations. We look forward to working with our new colleagues to develop and grow the business and continue engaging with our contractors and the broader supply chain to deliver a successful future.”

Asi Bartfeld, Delek Group CEO, added:

“The acquisition is a key part of the Delek Group’s strategic focus on building a world class E&P business. Acquiring CNSL accelerates implementation of that strategy and further strengthens the Group’s oil and gas business. We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets.”

About Ithaca Energy

Ithaca's strategy is centred on building a highly profitable, leading North Sea oil and gas company. The Company is an experienced North Sea operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries and the exploitation of its UK producing asset portfolio. The Company was founded in 2004 and has grown through the execution of both new field development activities and acquisitions. Ithaca is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group Limited (TASE: DLEKG, US ADR: DGRLY), Israel’s leading integrated energy company.

About Chevron

Chevron Corporation (NYSE: CVX) is one of the world's leading integrated energy companies. Through its subsidiaries that conduct business worldwide, the company is involved in virtually every facet of the energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power; and develops and deploys technologies that enhance business value in every aspect of the company's operations. Chevron is based in San Ramon, Calif.