Hello, and welcome to the Ithaca Energy H1 Results 2024 Bondholder Webcast Call. My name is Ezra, and I will be your coordinator today. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, it's star followed by two. I will now hand you over to your host, Iain Lewis, CFO and Interim CEO, to begin. Iain, please go ahead.
Many thanks, and good afternoon or good morning to everyone who is joining us. Thanks for taking the time to join this call. So we're gonna go through the half-year results as released today to the market, and we have just uploaded the prospectus to the website as well as of the last half an hour or so, 40 minutes. So that should give a really pretty full overview of the transaction that we expect to complete with Eni, which has been a core focus of the business over the last few months. What I'll do is we've got a fairly large presentation here. There's 40 slides. I'll just take out some of the highlights and move through relatively quickly and get to questions.
Very happy to jump back to any of these slides and go into any detail as required and value the questions, particularly, so please drop those through. So let's move through. Slide two just shows President Yaniv can't make this call, so it's just myself today. The agenda on slide three, quick overview highlights of 1H, overview of the combination with Eni U.K., operational and then financial review, and then we'll close out and take Q&A. So moving to slide five on the highlights for the year to date, and first of all, progress on the buy, build, boost strategy across our portfolio with the deal with Eni moving forward substantively with the release of the prospectus today.
We deliberately delayed the prospectus release so that we could have June thirtieth CPR, Competent Person's Report, up- revved. So we spent a lot of time on that through May, June, and July and closed that out. That's part of the pack today. That gives a really full, like, insight into the business from an independent perspective. So that's been released today and gives more information on the assets and the economics of the deal. Made good progress on our Captain EOR project, phase II project, and that's completed through 1H, including first injection of polymer in May. Good progress in Rosebank, particularly in the subsea scopes over this past 1H.
And then, we also worked over a well in the Erskine field, a significant producer in the Erskine field that had scaled up in the last shutdown, and so that's been drilled and is now online. Production in the first half slightly lower than we hoped for, but the main reason for that are non-operated portfolio issues that are short- term and essentially all recovered from now. So, we're expecting a more substantive second half regarding production. However, we've been able to make cost reductions and tax cash reductions, which means that essentially from a cash perspective, we're pretty much in the same place as we were in the midpoint of our guidance at the start of the year.
Robust EBITDAX at $533 million year to date. Strong support on our hedge book for the EBITDAX in the half- year. Nearly $100 million of EBITDAX generated from our hedge book. And that closes us out at the end of June with a low net debt to EBITDAX, so low leverage ratio of 0.4x , and with over $1 billion of liquidity available to us. That strong position means that we're able to declare a first $100 million interim dividend today.
So we did that today, payment through September, and just confirms the highly cash generative nature of the business, which will only be augmented by the deal, the combination with the Eni U.K. that we're currently working through to completion. So on that, forward to slide seven, a nice picture of Cygnus Bravo there in the semi- light. So this is one of our new assets, the operated Cygnus platform. And really, these eight points, they're gone into in more detail in the prospectus, around what this deal does for us as a business.
We have covered a lot of this before, so I won't spend too long on it, but essentially, it really establishes a platform and a basis forward for the business that is really solid in terms of production, in terms of cost per barrel, in terms of capacity for debt, the balance sheet strength that the company has. On a pro forma basis, at the end of 2023, the pro forma business has about 0.23x net debt to EBITDAX. So you can see the kind of capacity in that business, but it also reduces our ESG impact through lower emission intensity barrels through the process, and we through the assets being added.
We end up with, you know, a really stable, strong business with two large committed long-term shareholders in Delek and Eni, and really move forward from a position of strength. Slide eight we've really presented before. It's just a summary of the combination and where we get to in terms of production, EBITDAX and gas liquid splits when we bring this together. Very synergistic portfolio. Slide nine summarizes some of the go-forward opportunities that come out of that. You know, we are in the U.K. At the moment, the UKCS is our home. We have organic growth options here that are very material.
There is consolidation options in terms of inorganic options that could be value accretive, and we have a credible platform now for international M&A, including a strong technical partner in Eni that is with us as we move forward into the future. Moving on to slide 10. A bit of a summary of the asset crossover on the jurisdictions in the UKCS that we are now operating in, and summary of some of the CPR type data on the right-hand side. We've got the organic production potential for over 100,000 barrels a day for 10 years in the U.K. That's a long portfolio of strong organic optionality.
On our base business, we expect reserves and resources of 62 million on completion, and that has the option or the opportunity for, in the next five years, 2025 through 2029, to generate $10 billion of pre-tax cash from operations, and that's outlined in the CPR. Very diverse portfolio, no hub more than 20% of the production of the company, high quality, long-lived assets, and really a portfolio that's that's fit for the future. That's shown in slide 11 as well. If we can move to that, you can see the 2P reserve profile for the already producing and sanctioned projects, and highly likely to be sanctioned projects sitting in the 2P deck.
These are infill drills, ongoing projects like Rosebank and the opportunity here in the green is the 2C, the contingent resource that lies beyond. You can see the capacity there and the ability to generate and to maintain production at over a hundred thousand barrels a day in the long- term. Slide 12 just summarizes something of the Eni satellite model that we form part of on completion. And really, this is about replicating the model from Eni's perspective that has worked so well from other jurisdictions, including in Africa with Azule and in Norway with Vår Energi.
We tagline this as being the combination, making the agility of an independent match with the capabilities of a major, and we expect to really drive value from this in the coming years. Slide 13 just summarizes the uplift. This is from the CPR. The next five years, you see an average production increase of 34%. You can see an increase of cash flow generation on the right-hand side, over 30%, and a stabilized cost per barrel. You know, the average cost per barrel in Ithaca was at $24 in the five-year CPR, excluding the Alba Field, but that had a peak and a trough in it in terms of the trend over the next few years.
What the combination does is kind of flatten and solidify and stabilize that cost per barrel, again, which is very positive from a business perspective. Okay, one thing that doesn't change is slide 14. This is the capital allocation framework. This was our IPO structure. It has just been flowed through to the ongoing business. We like it. We know investors and our financing stakeholders like it. It allows for appropriate sustaining investment, being the first cut of cash flow, then the appropriate protection of the balance sheet and the leverage ratios secondly, then the return to equity shareholders of material equity contributions with then the evolving of the business in the right-hand side, with the opportunity to organically grow, to M&A or to yield additional distribution to equity holders.
So, disciplined capital allocation framework allows us to maintain our model of protect, return, and evolve. Slide 15 summarizes the increased balance sheet and financial strength of the company. This is, you know, a scale combination, which is fiscally efficient from a tax perspective, with low leverage, and with a path to improved credit rating, that's before us. So undergoing a number of discussions with rating agencies now post-deal, to up-rev their ratings on us. Slide 16 summarizes the carbon or decarb focus of the business. You know, this is adding short-term, low emission intensity assets like Cygnus and Seagull.
In the medium term, you know, we expect some of our assets to come to cessation of production, some of the higher emissions assets, and we're moving towards assets like Rosebank, which is in execution phase and Cambo, which we're looking to take to FID next year. And this is, you know, great examples of low carbon emission projects that have the opportunity to be electrified and really links to the long-term strategy. Slide 17, so our revamped leadership team and executive director base post the combination, and this will be live from the close of the transaction in early Q4. And brings together some of the talent from the existing team and new additions to the team, including Odin Estensen, who came into the team in the last few months.
He's already involved in the business and really making a difference in operations. Okay, on to slide 18, just a bit of a summary of our long-term shareholders. This is a great combination of two entrepreneurial businesses. Delek, a long history of generating value, and starting in the East Med, in terms of oil and gas, but with experience in different basins. And Eni, you know, arguably the most successful major in value creation over the last several years, and there's a slide in the back of the deck, which we won't get into, which kind of shows that they know the path to value. They've generated a lot of value and a great partner going forward. Slide 19, summary of the timeline. Really no huge change to this.
A few weeks of a move, I guess, to early Q4 completion, given the prospectus has been published today, with that CPR date updated to June. Okay, I guess the next slide, so slide 21. I'll move through these really quite quickly. These are 1H, in lots of ways is relatively limited news. We've had some short-term production issues that are largely resolved on a lot of our bases, like Pierce, Schiehallion and Lomond, which is the host for Erskine, and the J-13 well in Jade. These are all being worked through or have been worked through and back up our production is materially increased. You can see the 2H production is expected to be higher or at least as high as Q1, if not higher.
And you can see that in the guidance. But you see the pro forma business, which is the last column in that graph, in slide 21, that shows you where we really see the business, in reality going. Slide 22 is just a quick update on the Captain EOR project and the other asset activities ongoing on Captain. Busy asset, lots of long-term value and really a lot of investment in the asset, including the rig, getting ready for drilling and front-end engineering design complete on the electrification project. Slide 23 is about Rosebank. Again, just a really quick update in terms of the material scopes that are ongoing. Lots of work, subsea templates being installed. In the bottom right, you can see the size of those.
If you get an idea of the shipping and the vessels, these are very significant subsea structures, which will be drilled through for the wells. And they are now all in place, West Shetland. They've been lowered at the sea, and those are ready to be drilled through. So a lot of progress on the project, and then I guess we move to the financial overview. Slide 25, summarizing some of the high-level numbers there. $100 million dividend, declared today. Production, as we said, 50,000 barrels a day, and EBITDAX 533. One of the key metrics there is the available liquidity of over $1 billion, so in good financial strength as we move through into the second half of the year and the completion of the deal.
Slide 26, some detail on EBITDAX. Key things to call out here really is the hedge contribution. See the protection of value through the hedge book, $10 a barrel of additional value in 1H 2024, $98 million of EBITDAX generated. Another thing to call out is the cost base. You know, our costs are lower in 1H 2024 versus 1H 2023. That's in an inflationary environment, our costs have reduced, but actually the year-on-year, the activity in 1H 2024 is higher than the activity in 1H 2023, as we had a number of shutdowns in June this year rather than in kind of September, October, August, September last year.
So good cost management, good cost control, and gas prices are softer than last year, but significant retention of EBITDAX on the basis of our cost control and hedging. Slide 27 is the summary on our protect leg of the capital allocation framework. Shows the strong cash position at the end of June, RBL paid off and $280 million of cash. Liquidity over $1 billion, and net debt to EBITDAX of 0.4x . So strong continued protection of the balance sheet. Slide 28 shows a little about how we've done that and been doing it. Hedging at the peaks in value.
We've done a lot of gas hedging the last few weeks as gas has been up, so we're very glad to be able to lock in swaps of gas, essentially at 100 pence a therm through Q1 2026. That's in every quarter above 100 pence a therm right through Q1 2026, which is great, and a lot of nice hedges, including wide collars. We changed our policy on this a little. We went to the board and explained that put options in the market were really quite expensive, and we didn't think we were getting good value, and so we weren't putting the put options down.
So we agreed a policy change to have wide zero cost collars instead of puts for our 25% put range of the policy there in the middle at the bottom. And that's allowed us to put in hedges and gas, particularly, which are at the, you know, 75 pence floor, leading right up to in the high 130s-140s, from a wide collar perspective. A lot of value being generated through that hedge book and continues to be a focus. All right, moving to closeout, slide 30, just a quick update on guidance. I mean, really, the focus here is on the fact that relatively to our base position going into the year, the net cash impact of all the changes is relatively limited.
Slide 31 shows that we're, you know, about 15 million reduction, midpoint to midpoint, when we take revenue, Rosebank CapEx, and cash tax adjustments into play. But essentially, our updated combined guidance, including the ENI assets from one July, give you a kind of view of the kind of running room forward and support our dividend commitment and ambition for the year. So slide 32 is closing out for questions. You know, these are the key updates. We have a great combination coming to a climax. Really good to get the prospectus out today. It's been a lot of work and a lot of effort from a lot of people, but we're glad to get it out today.
Leadership, it will be up-revved and adjusted from close, and we're looking forward to welcoming new colleagues in the leadership team. Progress on Cambo and Rosebank, two of our key value assets for the long- term, and commitment to our dividend program continues with $100 million declared today. With that, I will close out the formal part of the presentation and go to Q&A.
Thank you very much. Please submit your questions on the webcast using the Questions tab above the slides. We've got a question from Xuying Zhu from Aegon Asset Management. "Hi, two questions from me. One, when do you plan to refinance the 2026 bonds? And two, do you expect raising further debt for M&A and for Rosebank? What options do you prefer, and will you consider project financing? Thank you.
Sure. Xuying Zhu , so thanks for the questions, and so we have a number of options around refinancing at the moment. I think the key, the key point, I guess, in the business is we've significant liquidity and debt capacity and really, we have a new business from close of the transaction, and we need to work through the relevant steps to what financing and refinancing steps make sense in that context, so we have an RBL that comes to maturity end of June or in the middle of 2026, and the bond matures as well. It's quite possible we could leave both, refinance one, refinance the other. We have a number of options and actually, it depends on our M&A.
Strategy is one thing with M&A execution. While we're keen to grow, we will do the right deals at the right time. What that means is that we'll finance those at an appropriate way when the time comes. Every deal we've done in the past, we've looked at the finance model and the structure, and we've responded accordingly. The second bond deal we did, we drew on the RBL and then paid it down thereafter. Not every deal is like that. This deal is a paper deal with the issuance of shares. Let's see. M&A can come in many forms, many shapes, many sizes, and need many different types of refinance.
Right now, we're very happy with our structure and with the support that we've had in the market, and we know there's capacity there for us if we choose to move ahead with it.
Thank you very much. There are no further questions, so I will hand back over to Iain for any closing remarks.
Sure. Thank you, look, and thanks for everyone's attention on the call today and the interest. We know we do this because we value our bondholders and the support that we've had through the last few years on these bonds. Thanks for that, and look forward to engaging with a number of you, I'm sure, in the coming season of live finance conferences. And on the next results call, likewise, we'll hold another bond call and look forward to your questions then. Thank you very much.