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(Sharecast News) - Ithaca Energy said on Monday that it has agreed with Suncor to buy a portfolio of conventional offshore oil assets located in shallow waters off the East Coast of Newfoundland and Labrador, Canada, for up to $1.1bn.
The assets comprise a 48% operated working interest in Terra Nova, a 40% non-operated interest in the White Rose Existing Lands, and a 38.6% non-operated interest in the White Rose Growth Lands, including the West White Rose Extension.
Executive chairman Yaniv Friedman said: "This acquisition marks the next era of growth for Ithaca Energy as we make our inaugural international acquisition in Offshore East Coast Canada. The transaction delivers on our clear stated growth strategy as we seek to diversify and grow our production and resource base and replicate our success in the United Kingdom Continental Shelf through disciplined international expansion in regions we believe we can create long-term value for our shareholders.
"The transaction builds on our vision for 'Scale, Stability and Strength'. It adds long-life, low-decline barrels in an offshore operating environment similar to the UKCS, which will materially enhance our medium-term production outlook and create a platform for further organic growth and consolidation, while expected to deliver immediate cash flow and dividend accretion."
At 0923 BST, the shares were up 2.6% at 282.60p.
Russ Mould, investment director at AJ Bell, said: "Fresh from finding a place in the FTSE 100 for the first time, a move supported by significant M&A, Ithaca Energy has announced another big deal.
"Significantly, the company is buying its first assets outside of the North Sea. The industry has consistently bemoaned the tinkering in the fiscal and regulatory set-up for oil and gas in the UK and this deal for Canadian assets provides a level of diversification.
"The deal could even represent a planting the flag moment in the North American market for Ithaca and act as a precursor to adding further assets in this region.
"Backing from majority shareholder, Israel's Delek, and cash generation which is being bolstered by high energy prices mean that, for now at least, Ithaca has the necessary firepower to pursue further deals.
"Though investors may be wary that snaffling so many substantial assets in a relatively short timeframe could lead to some indigestion for Ithaca."
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