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In a decisive expansion push, Ithaca Energy PLC announced Tuesday that it will acquire the U.K. subsidiary of Japan Petroleum Exploration Co. Ltd. (JAPEX UK) in a $193 million deal, increasing its stake in a high-margin North Sea crude oil and natural gas project.

The acquisition is a strategic maneuver that underscores Ithaca’s aggressive growth agenda, consolidating its foothold in a lucrative energy basin while leveraging tax advantages that could shape its financial trajectory for years to come.

A Deeper Stake in the Seagull Oil Field

With this deal, Ithaca Energy— a subsidiary of Israeli-owned Delek Group—will increase its stake in the Seagull oil field from 35% to 50%. The remaining interest is held by BP Japan Petroleum Exploration Co. Ltd., making Ithaca a dominant player in the project.

The acquisition is part of Ithaca's long-term strategy to strengthen its North Sea portfolio by adding high-value assets with strong production potential.

"The acquisition of [JAPEX UK] shows Ithaca Energy's growth strategy in action," said Yaniv Friedman, Ithaca’s executive chairman. "It will add incremental production for the group in a highly attractive, high-value field."

Financial and Tax Implications of the Deal

While the deal is valued at $193 million, Ithaca anticipates paying approximately $140 million after accounting for adjustments. The company will also inherit:

• $215 million in tax losses from JAPEX UK

• $105 million in energy profit levy losses under U.K. tax regulations

This move not only expands Ithaca’s asset base but also provides significant tax benefits, further strengthening its financial positioning in a complex energy market.

JAPEX Exits a Market of Uncertainty

JAPEX, headquartered in Tokyo, first acquired its 15% stake in the Seagull project in 2014. However, the company cited mounting costs, the aftermath of the COVID-19 pandemic, and the volatile U.K. tax environment as key reasons for its decision to exit.

"The project has become costly since the pandemic, while U.K. levies and taxes have increased uncertainty about the business environment," JAPEX stated.

This highlights the shifting dynamics in Britain’s energy sector, where government policies and economic pressures are forcing international players to reassess their positions.

Regulatory Approval and Completion Timeline

The transaction is still subject to regulatory approvals, though neither party has disclosed which authorities will oversee the process. The companies expect the share transfer to be completed by June 30, marking a significant milestone in Ithaca’s expansion into the North Sea.

With this latest acquisition, Ithaca Energy is poised to solidify its dominance in one of the world’s most valuable offshore energy markets, proving that in the race for North Sea resources, it’s a company willing to bet big.