Welcome, everyone, to the Ithaca Energy Analyst and Investor webcast, April 2024. My name is Harry, and I'll be your operator today. If you would like to ask a question during Q&A, please dial star one on your telephone keypad to enter the queue. It's now my pleasure to hand you over to Gilad Myerson, Executive Chairman, to begin. Please go ahead.
Good morning, everyone, and thank you for joining the webcast. We're very excited to announce the combination of Ithaca Energy and Eni's U.K. oil and gas assets. Really, it 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 four, you'll see myself, Gilad Myerson, the Executive Chairman of Ithaca, and Iain Lewis is also on the call, who's the interim CEO as well as the CFO of the company. Moving on to slide 5, the combination really creates a powerhouse in the U.K. We're talking about pro forma production of over 100,000 bbl a day. This is significant scale. We've become the second-largest independent operator in the UKCS.
We have stakes in six of the 10 largest fields, and also we will be the largest operator in the U.K. Continental Shelf by production in 2030. We already have the longest reserve and resource base, talking about 658 million bbl 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 their satellite model. They've done this with Vår Energi in Norway. They've done this with Azule Energy in Africa. And this is an additional satellite of Eni. It really helps us as a powerhouse in the U.K. We'll be able to tap into the entrepreneurship within Ithaca, the agility of Ithaca, as well as the brand strength and the experience that Eni bring.
The third point is around the cash generation of the combined entity. We're talking about a company with significant cash generation. 100,000 bbl of oil really drives a lot of cash that we can then use for developing assets, for acquiring assets, as well as for providing attractive dividends to our shareholders. We have an ambition to distribute $500 million in 2024 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. I'm sure there'll be quite a few Q&A around Cambo, as they always are in these calls. With the combination of Eni, it essentially allows us to look forward and potentially sanction Cambo.
But not only Cambo, we also have additional organic opportunities the likes of Fotla, Marigold, and other assets that we're looking forward to developing. Eni, once again, brings 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 U.K. as well as within the U.K., 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 seven, 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 relevant fields, but also production. We have Captain. We have Schiehallion. We have Mariner. We have Cygnus now. We have Elgin Franklin, a much larger stake in Elgin Franklin.
What's interesting is 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 companies in the U.K. Moving on to slide eight, the picture over here is of Eni's satellite model. They use this in their investor presentations, and I'm sure they'll be talking about the satellite model in the context of the Ithaca transaction as well. Ultimately, they have decided to create these satellites where they have businesses without sufficient 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, their 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've fully committed to growing Ithaca Energy as their U.K. 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.
Thanks, Gilad. So on slide nine, we have a summary of the transaction and how this is going to work. Really important to note, this is a business combination. Lots of the press this morning have been seeing it as an acquisition, but it is really a partnership and the combining of two businesses and really a large-scale holding by Eni but still material and large shareholding of Delek. So it's the bringing together of businesses. You can see on the right-hand side of this chart that the merger ratio is 38.5%. That's in line with the range that we announced at the exclusivity announcement. There is a requirement to keep a 10% free float, 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 at completion.
There is a shareholder vote, as Gilad said, an irrevocable undertaking by Delek to support that. Therefore, the process will involve a circular and a prospectus, but it is a clear commitment of the two large shareholders to complete this deal and bring this partnership together. The directors of the company; there'll be two nominated directors from Eni. There'll also be the appointment of a CEO, which was part of our current search for appropriate CEO to take us forward. 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. Very excited about the combination and about the structure and how we move forward together. Slide 10 really starts to get into some of the details around those five key points that Gilad's 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 standalone 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 wanted to do at IPO. We said we wanted to grow the business, and we wanted to return to shareholders. The changes around EPL2 really made that more difficult and really stressed and challenged 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 and 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, to slide 11, a bit of a snapshot of where we are, pro forma production in 2024 of 100,000-110,000 bbl a day. You can see where that puts us in terms of the combination. Clearly, the fifth largest, we serve outright, second-largest 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 unrisked production by 2030.
As you can see, the extension of Cambo together with the Eni fields enables us to be clearly a large player in 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 an external view of where we are, materially larger than anyone else in terms of likely to be developed resources. And on the right-hand side, you have six 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 as slide 13. And you can see what has happened with Vår Energi is really what we're looking to happen here, what Eni's view is of the 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 the story of Vår Energi. And it's what we committed to do at IPO. And this model just helps us achieve those objectives. So you'll see throughout, 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 closure will be in Q3 or maybe in early Q4, but that's not impacting the economic effect, which is actually it will be from 1st July. So that's how you get to these combined guidance numbers. Where for the full year 2024 with Ithaca's base portfolio for 12 months, the Eni U.K. assets for six months, we get a combined 2024 guidance of 80,000-87,000 bbl a day, $650 million-$730 million OPEX, $410 million-$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, 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 and what this enables us to do, 2024 production shows a 43% increase in itself, and that's with just the 2H 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 costs per barrel but trending lower so that we are expecting to get down towards the low $20 per bbl and pushing that as low as we can in the medium term. There are financial synergies around the scale and debt capacity. These assets are being injected by Eni with no debt, so it's debt-free. So they'll come across with significantly increased debt capacity.
We already had significant liquidity in the business, over $1 billion at the year-end of liquidity available. This just extends that further. It improves our credit rating. We're expecting to move towards double B as we move through the ratings assessments post 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 one 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, and profit per share. So it is supportive of shareholder value throughout. And that's reflected in the dividend policy where we maintain our 15%-30% post-tax cash from operations.
But then we're 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. This underpinned the IPO story, underpinned our investor commitments. We are redoubling our emphasis on it as part of this deal. This is entirely in line with our strategy. It is an appropriate and a high-quality response, we believe, to the EPL2 introduction. It resets us on the journey to deliver what we said we'd deliver. Just to remind everyone, we said at IPO that we would take the cash from operations. 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 bbl a day. So that's our aim is to spend CAPEX, first of all, to sustain production at 100,000 bbl a day. And we have the ability to do that out for the next four-five years with just the base investment 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 ceiling. With the enlarged business, with the new assets that come in unlevered, we at the end of 2023 on a pro forma basis are something like 0.2x net debt to EBITDAX. So significant headroom to keep below that target and substantial leverage capacity in the business that gives us optionality.
Thirdly, we committed to return 15%-30% post-tax cash from operations. We did that in 2023. We committed a $400 million dividend. That was exactly, as it turned out, 30% post-tax cash 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 it. The last tranche was 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 30% post-tax cash from operations that we commit to delivering that in 2024 and 2025. So that range, which is our medium-term policy, we're able for 2024 and 2025 to pin ourselves at the top end of that range at 30%. But then there's cash flow beyond.
This is where we get into, and we've always said it was either grow, extend, or yield. 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 annum 2024 and 2025. So that's the ambition. We're working hard towards that. But we expect to have substantial capacity beyond that in terms of growth CAPEX or M&A. As Gilad mentioned, Cambo is a large part of that and possibility and option in there. There are many others as well. We're active in the M&A review front continually. So again, just reconfirming, this is what we said we'd do, and we're doing it. 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. That's what we continue to seek to deliver. Slide 17 gives us the scale concept around this business. You'll see in the blue the combined reserves, the 2P reserves for the business. You can see that that is above 100,000 flat out through 2028. There are smaller, straightforward tie-backs that add material production also, like some Fotla development, which is moving through approval hurdles. That is a position that we expect to deliver. Then we have growth beyond. There's the Cambo resources, but also numerous projects beyond in the base portfolio. This is within our portfolio. It's within our grasp. That doesn't count, 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 believed in and we were seeking to deliver. The fifth point in terms of inorganic growth, 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 views 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 with what we said we'd do at IPO. And we think a very strong message 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 timeline 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 and the class one transaction circular, looking to publish that around the middle of the year.
We'll have shareholder meetings around the same time. As has been said, Delek have given already a revocable commitment to vote for the deal. They obviously are nearly 90% shareholder at the moment. So that's the structure. And then there's what is pretty customary regulatory and government approvals expected with targeted completion in Q3. But effective economic date continues to be 1st July. Okay, Gilad, I'll hand 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 Eni 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'd done Summit and Mitsui Marubeni, which were more bolt-on acquisitions. Really, Siccar Point enabled us to have a resource base, which was available to many with Cambo and Rosebank, as well as other opportunities. Then we IPO'd the business. And really, this is the next phase of growth.
We believe this business combination will really turn Ithaca into the premier player in the U.K. With that, I'll pause and hand over to the floor for any questions you may have.
Thank you. If you would like to ask a question, please dial star, followed by one on your telephone keypad now. If you change your mind and would like to withdraw yourself from the queue, please dial star two. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally. As a reminder, that's star one for any questions now. Our first question today is from the line of Werner Riding of Peel Hunt. Werner, your line is open. Please go ahead.
Thank you. Morning, guys. One of the features of the deal today is 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 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 Profits Levy. But all else stable. I think we're pretty comfortable with the guidance as it is at the moment.
Okay, thanks. Actually, you sort of touched on what I was going to move to next, actually, which is the timing sensitivities around Cambo FID, bearing in mind the upcoming election. Does it have to be sanctioned during the current government to progress? And as it is, it then perhaps runs the risk of being shelved almost indefinitely under a Labour 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 two 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 hydrocarbons themselves? And if we look at the impact of importing, it comes at higher emissions, higher costs, less jobs, lower tax collection. And therefore, we believe the next government will be constructive towards development. We heard just a year and a half ago, we heard relatively strong statements from the conservatives against developments. But then that rapidly changed when they realized the benefit to the economy. And we believe that the new government will also be relatively constructive towards new developments.
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. Therefore, the statements are not fully clear exactly what they're planning to do. Therefore, I think post-elections we'll have a much clearer view of the overall support of the new government.
Okay. All right. Thanks very much.
Just to review, just really to add on, Werner, to both 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 ceiling. So that's, I guess, a clear commitment. In terms of the government's position, as Gilad says, this will evolve. And we see it evolving in Europe right now. I mean, the LNG, the carbon tax on 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 to the government, and we'll continue to do so. Sense will prevail, we believe, and this will earn us.
Hopefully so. Thank you.
Our next question today is from the line of Sasi Chilukuru of Morgan Stanley. Please go ahead. Your line is open.
Hi. Good morning. Thanks for taking my questions. I had two, please. The first was related to CapEx. You've highlighted production to be sustainable at above 100,000 bbl per hectare 2028. I was just wondering if you could comment on the average CapEx required for the company over this period as well. The second one was, again, coming back to Cambo and the farm down. Just wondering if you're still actively pursuing farm down. So does this transaction have any bearing on the expected timeline for the farm down? What's the progress there?
Yeah. So I'll repeat the first one and then pass to Gilad for the second one, Sasi. So in terms of CAPEX, I think the guidance, as I said before in the presentation, probably helps get you at kind of landing zone. 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 2024. And in fact, 2024 CAPEX, they've included Seagull project closeout and final well. So there's kind of one-off CAPEX in there as well. So in terms of sustaining CAPEX on Cygnus, Elgin Franklin, and J Block, 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 at the moment.
I would say in CapEx, that's the kind of landing zone there. You're at a fairly small increment to our current base CapEx, which is why this is highly cash generative in the short term. Gilad, Cambo?
Yeah, 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 three 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.
Very helpful. Thank you very much.
Our next question today is from the line of Matt Smith of Bank of America. Matt, your line is now open. Please go ahead.
Hey, good morning. Thanks for taking my questions and 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 a M&A-led strategy you expect this to be going forward. And then the obvious follow-on to that was just, and where, are we looking at Ithaca Energy being a U.K. pure play, or do the options sort of still remain open to also diversifying outside of the U.K. basin, please?
Yeah, many thanks, Matt. In terms of growth, we are looking into opportunities both within our portfolio, organic growth, as well as we're looking for acquisitions. Within acquisitions, the opportunities in the U.K. and opportunities abroad. We'll walk you through those three. In terms of organic growth, ultimately, we believe that the projects that we currently have are very attractive, provide significant returns, once again, subject to potential fiscal changes. 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 were talking about doing Cambo and Rosebank and Marigold and Fotla. But due to the EPL, we've had to slow things down quite considerably. We progressed with Rosebank, and we would like to progress with Cambo now that we have this partnership with 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. Therefore, we're speaking to current governments as well as potential future contenders in order to understand how they see developments as core to the U.K.'s energy security going forward. That's on the organic side of things. What we don't want to do is we don't want to stop and wait. 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 U.K. that we think we're a natural owner for those assets. With the larger scale, it makes the acquisitions even more attractive. That's opportunities in the U.K. And then opportunities abroad, we've actually been looking at opportunities abroad.
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 it's a yes to all of those three opportunities. But we're exploring. We haven't made any big decisions over the last year and a half because of the fiscal environment. Therefore, we're treading quite carefully.
No, I understood perfectly. Well, thank you for all the detail. And perhaps just one follow-up on that second point, if I could. Just so while 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, close to the U.K. North Sea, if outside? Or is everything on the table in that regard, of course, dependent on finding the right opportunity, that is?
Yeah, well, really, it's about value creation. That value creation needs to come from an opportunity which is mispriced. We believe that we will be able to create significant value. The U.K. is obviously. That's why our first priority is in the U.K., simply because we understand the basin. We know the assets. By now, we know all the assets in the U.K. pretty well. We've diligenced them all. We have a lot of fiscal synergies, operational synergies. Therefore, it's the easiest. Norway, Netherlands, Denmark, the operating philosophies are very similar. 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 we go into a new jurisdiction. Then going to the likes of Gulf of Mexico, it's slightly further removed.
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. Therefore, naturally, closer is easier to add value than further.
Understood. Well, thank you for your time. I'm happy to pass it on.
Cheers.
Our next question today is from the line of James Carmichael of Berenberg. James, your line is open. Please go ahead.
Hi, morning, guys. James Carmichael from Berenberg. I was just wondering, just a couple, please, if you could maybe give a bit more detail or quantify some of the financial synergies from the deal, how we should think about OPEX going forward, or wherever those synergies sort of come from. 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. 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?
Yeah. So I'll jump in on the first one here. So in terms of the synergies so we haven't given specific numbers. And I guess quite normal, I guess, in deals like this. There are a range of synergies across the transaction. Clearly, we're bringing together operated assets from our side with the Cygnus assets. So in terms of supply chain contracts and interactions, that will bring additional scale, which is part of what we've been doing here, integrating the Chevron assets since 2019. So there are ongoing supply chain synergies that I expect. There will be synergies around the financials. There are some tax synergies associated with most U.K. deals and bringing together a bigger company with capital, expenditure, shelter, etc. There'll be financing synergies in terms of the cost of debt, which we expect to reduce, and footprint synergies around infrastructure, etc.
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 that is 100% Ithaca. So obviously, there are a range of other projects with different equities. But in terms of 2C resource space, those are the two largest that are 100% Ithaca that will entirely be in our control to farm down and to move forward, as Gilad mentioned.
Great. Understood. Thanks a lot.
Thank you. As a reminder, if you'd like to ask a question, please dial star one on your telephone keypad now. Our next question is from the line of Chris Wheaton of Stifel. Chris, your line is open. Please go ahead.
Great. Thank you very much indeed. Good morning, guys. Two questions from me, if I may, please, on the structure of the deal. I'm interested in why Eni chose Ithaca. It had other options to sell its U.K. assets. I would have thought the obvious one would be to inject the assets into NEO Energy, given the partnership at HitecVision, just as you've got with Vår Energi 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 injections from Eni into Ithaca. Secondly, I'm interested why equity, not debt, because you've not been afraid of using debt in the past to create advantage to shareholders. And certainly, on my numbers, a reasonable commodity price deck, you would have peaked at around 1.7x net debt EBITDAX had you done this deal entirely in debt.
Actually, not very much above where your debt ceiling is. I'm interested why then the structure of the deal is 100% equity and lots of debt components as well, or indeed, all debt. I'd probably stop there for a moment. Thank you.
Cheers. I'll have you take the first one. And then, Iain, you could pick up the second.
Yep.
In terms of why Ithaca, not NEO Energy, really, that's a question to Eni, not so much to us. They had been considering multiple opportunities in the U.K. 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 discoveries. They've also done quite a few developments and are in the midst of developing some big fields. Ithaca, from the initial discussions that we had with them, they very much liked our approach. They liked 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 U.K. in the future. So it's very much a long-term view.
If you look at Ithaca compared to other independents in the U.K., we are very different because we have a relatively stable production base and then start to grow with the large projects. Very few other companies offer that same long-term prospect. So I imagine that they would say that would be their number one priority. Then, of course, you have just the track record of growth and agility of the organization. But really, I would ask them that question. On the equity, not debt, Ian, over to you.
Yeah. No. I think actually, the intentions of Eni here play into this as well, right, because this is not a sale. It's not an acquisition. It's a combination. You could ask Eni directly whether these assets would be for sale. They were not interested in selling from earlier starting. It was an integration, a business combination that brings them into the satellite model that's been very successful, I'll swear. So therefore, raising debt to buy these assets, I don't think 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. Yeah, presumably, Eni 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 governance perspective and also from a market access perspective that sets us up to go forward with a large-scale company with the commercial and the technical capability of Eni behind us. So that's, I guess, why equity. Also, in terms of what we believe is a stock position in the U.K. for oil and gas companies and ourselves particularly, we don't believe is necessarily reflecting underlying NAV value, the bringing together of two U.K. asset-based companies where that market view, if you like, is reflected in both asset bases. The 38.5% relative NAV view that we've taken together with Eni and brought together, we believe, then brings the synergies and the scale, which enables us to move forward on a strong basis and with the leverage capacity enhanced materially.
If we'd done this deal by debt, we would then be having to pause in terms of growth. We'd have difficulties, I would suggest, in the level of returns that we're looking to make, whereas this enables additional growth and returns, which is the aim of the transaction.
Okay. No. Great. Thank you very much indeed.
Thank you. And we have no further questions in the queue at this time. So I'd 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. 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 Ian or myself or Catherine. We'd be happy to address any of your questions. Thank you so much.
Thank you.
This will conclude today's call. Thank you all for joining. You may now disconnect your lines.