Let's go. Good morning, everyone. Thank you for joining us for this market update. My name is Yaniv Friedman. I'm the Executive Chairman of Ithaca Energy PLC. And we're all about long-term value creation. Before we go into the long term, first of all, thank you for Rothschild & Co for hosting us in this amazing, beautiful venue. It's very difficult to stay focused with this beautiful view, I know, but this is more interesting than the—no, actually, this is more interesting than the view. Please stay with us. It's a very nice sunny day here. Those of you who are joining us online, thanks for joining, but you're missing the view and the refreshments afterwards. Before I start, just introducing my colleagues who are going to present here with me. Luciano Vasquez, our CEO, joined us post the business combination with Eni.
Luciano was the Managing Director of Eni U.K. A nice trivia point about Luciano: he lived in how many countries?
I changed 25 places.
25 places he changed, and he's just 25. Imagine how many times he moved around. Luciano has a lot of experience in managing assets and operations in different places around the world. He'll talk about this later. Iain Lewis, our CFO, who was doubling as CEO in 2024 until the closing of the business combination. He has been with Ithaca almost three years, Iain, in the summer. Odin Estensen, our COO, was Managing Director of Neptune, Norwegian and U.K. business. He was in Shell previously. He'll tell you some anecdotes from his previous life, kind of coming back to him when he's now with Ithaca in some of our assets. Julie McAteer, our General Counsel, who's currently also our EVP of HR. We'll all go on stage and answer questions later. Today's agenda: we'll talk about our full year 2024 results.
We will go into investor updates and obviously Q&A. Before Iain goes to stage and dives into this, I think 2024 was all about performance. We are executing on our strategic objectives, delivering enhanced cash flows, and a very rigorous capital allocation policy. If you look at our proforma production, over 105,000 barrels per day of production proforma in 2024. We have reached peak production in Q4 of 2024, 138,000 barrels per day. We are seeing the trend continuing into Q1. We will talk about this in a bit more detail later, but we are seeing 120+ thousand barrels a day of production in Q1. This resulted in a $1.4 billion Adjusted EBITDAX. When you look at the Q4 numbers, they are close to $650 million. On capital investment, $650 million. We will break it down later. The message is we are investing in our assets.
We're investing in our development assets, such as Rosebank. We'll obviously speak about Rosebank. I'm sure you have questions about this. Coming right out of the gate on completion of the business combination, we had a very successful refinancing of our reserve-based lending facility and our notes with a $2.25 billion completed that demonstrated the strength of our balance sheet and the firepower that we have to do other things. We've met our dividend target, distributing in 2024 $500 million back to our shareholders. We intend to meet that target again in 2025. We've had a transformational business combination, which for us looks like a while ago, but it's actually five months ago. We've done so much since, including the announcement of the JAPEX transaction yesterday. I think overall, this has been a very, very successful year.
Looking at our operational performance, first of all, safety. We're very proud that we have zero tier one, tier two events, no serious injuries or fatalities. We're looking at our emissions going down. If you look at what the E&R portfolio gave us on that front as well as a reduction. I think it's really interesting to look at this side by side. You're seeing our average actual production in 2024 with the proforma production. Assuming the Eni assets were there through the year, look at our OpEx per barrel, Adjusted EBITDAX, net cash flow from operations of $900 million. We have significant available liquidity of over $1 billion. I want to focus on Q4 because I think that's the new Ithaca, right? This is where we're headed. This is where you're going to see from us going forward.
Averaging 160,000 barrels per day of production, as I've mentioned, 138,000 barrels per day peak production in Q4. Focusing on cost control, we drove our OpEx down. You see the Q4 emissions intensity under 20 per kilogram CO2 per BOE and Adjusted EBITDAX of Q4 of 646. We came out with this three weeks ago in our trading update, just to kind of tick the boxes. Top end of our production met our guidance. Net OpEx below our guidance, which is a good thing. People ask me on one of the calls, does that mean it's a good thing? Yes, it's a good thing being below on OpEx. When you look at our producing asset capex, right in the middle of mid-range of our target. We keep investing in our assets, sustaining our assets.
We have a very good portfolio that we'll speak about later. Slightly above target guidance on capex on Rosebank. This really means the project is progressing on schedule. We're investing, obviously not material, but we're investing as planned. We're seeing the progress. Odin will speak about Rosebank later. Combined cash tax payments right in the middle of the range. Obviously spot on dividend, which is something I know our investors are extremely focused on. Iain Lewis, please.
Thanks, Yaniv. Good morning, everyone. Let's wrap up the 2024 numbers with a few slides before we get into the wider update. This really tells the story, as Yaniv mentioned, of our production growth in the year. This is the new business in Q4. You can see the uplift through Q3 pro forma. The actual numbers coming in Q4 with 116,000 barrels a day and the pro forma of 105.5. As we release guidance today for 2025, and we release a CPR today that shows the medium-term outlook for the business, you can see that this is the kind of level that we expect to be at and beyond as we move forward. This is about operational efficiency. It's about investment in the assets that we've continued to make over the years of uncertainty in the past.
We continue to reap the benefits of that with production increases in the short term. We have mentioned already that through November, through February, we are over 120,000 barrels a day. Strong start to the year. We are looking to continue that through the full year. This, of course, drives the cost per barrel metric. We have always been looking to keep cost per barrel in the low 20s. Really pleased to see Q4 cost per barrel at $14 and an outturn for the year at 22 on the combined portfolio, delivering against our expectations and maintaining cost-based control. Everyone loves an EBITDAX table. Some people enjoy an EBITDAX table. I will not take you through all of this, but people love to see this in the detail. I guess we will just call out the Q4 numbers here with that 116,000 barrel a day production in Q4.
With the cost base maintained stable with $14 a barrel, we're delivering nearly $60 a barrel of EBITDAX. Throughout 2024, even with lower production in the earlier part of the year, because of the cost control and because of the hedging that we've done, we see material EBITDAX per barrel in the mid-50s for the full year on a combined basis, which is material pre the acquisition of the transformational merger. If you look at the $135 million hedging gains in 2024, you add that to the hedging gains from 2023 of $266 million, $400 million of hedging gains in two years. We continue with the policy of protecting the business, but also giving ourselves a lot of upside on the hedge book. We'll explain more of that and go into more detail later. Strong results, strong Q4, and really driving through into 2025 with confidence.
In terms of our financial position, as always, we've been seeking to maintain material liquidity because we are an active growth company. We refinanced the company on the back of the transaction that closed in October. We did that with a two-notch upgrade on our ratings, and in fact, a new issuance rating for S&P. We now have all three agencies rating us in such a way that we're able to refinance at lower rates, the $625 million bonds that were 9% replaced with $750 million bonds at 8.125%. The RBL expanded in terms of the constituent members of the syndicate and uplifted. We had a $1.5 billion completion of the RBL in October. What that's done is we leave the year with strong liquidity of over $1 billion, with low leverage of 0.45 times, and in a strong position as we move forward.
Clearly, that's the kind of position that enables us to do high-value incremental deals like we announced yesterday with the JAPEX U.K. acquisition. Our growth ambitions are underpinned by financial strength and by a clear financial strategy. The refinancing, $2.25 billion, that was augmented actually in Q4 by over $400 million of unsecured LOC facilities from two banks that we secured as part of our wider enabling facility for LOCs. We're leaving with 0.45 times at the end of the year on our leverage, over $1 billion of liquidity, and those very impressive credit rating upgrades to double B negative at the end of the transaction. To close out 2024, as Yaniv said, we've given most of this three weeks ago. This is confirming and underlining the quality of the performance.
We have a material beat on many of our guidances, and in fact, the top end of most. Production strong in the closeout of the year, strong cost per barrel performance, and strong EBITDAX. Really, the message is that Q4 is the kind of delivery that we want to continue through 2025. We are seeing that in the early part of the year with strong continued operational performance. We close with the firepower and the capability to do more, which is what we intend to do. Yaniv.
Yeah. Thank you. Thanks, Iain. In this section, we'll cover strategy. Luciano will speak to organic growth. Odin will talk in more detail about the assets. We'll speak about our inorganic growth strategy. It's interesting. We're speaking and executing at the same time. We're very happy about the deal we've announced yesterday, the deal itself, but also the timing of it. It's neat. It's nice. We'll talk about capital allocation. Iain will come up again. Obviously, we'll open for questions. This is kind of the theme we're looking at, right? We understand scale is important. Scale gives us stability, stability giving us strength. We have two pillars to our business. We have our operations and organic growth opportunities. We'll talk about them. We believe they're very strong.
We're investing a lot of effort, time, resources, people in improving efficiencies, in optimizing our business internally. Luciano and Odin will talk about that. At the same time, we're looking at how to grow this business in a responsible way and create more growth and value for our shareholders. A dynamic growth player. We've covered this many, many times. I'm not going to repeat this in detail, but we're definitely the leader in the UKCS with a high-value portfolio of scale. The business combination gave us stability and cost control and production, but also creating a platform for further growth. Largest resource holder in the UKCS gives us a lot of material organic growth opportunities, but more importantly, optionality. We'll talk about optionality in a bit. Track record of transformational and value-accretive M&A. To remind everyone, we've closed on the NI transaction in October.
We've announced another transaction yesterday. This is how we see things. You will see kind of a brief snapshot history of Ithaca to date in the last five years and what it has done in five years, which is quite phenomenal. Strong balance sheet. Iain spoke to that. We are committed and focused on delivering back to our shareholders. Ithaca has since IPO distributed $900 million back to its shareholders, $400 million in 2023, $500 million in 2024, and targeting $500 million in 2025. I'm not going to go through this web. Just to start on a few points. Delek Group acquired Ithaca in 2017. This was followed by the first, call it transformational event on Chevron, followed by Siccar Point, the IPO in late 2022.
In 2024, transformational business combination that really put the business at the place it is right now, which is leading us to our next era of growth. Just to get a sense of what that means, right? First, as I said, $900 million of distributions to date since IPO. We're focused on returning to shareholders. If you're looking at production, under 30,000 barrels per day in 2019. Today, as we said, we're at a run rate of 120,000 barrels per day. Pro forma production of 105 plus in 2024. 2P and 2C resources, more than double. I want to say something about 2C resources. I think Luciano will talk about that later as well. Our 2C resources are viable and economic, right? We know how we want to develop them in the future.
Obviously, they need to meet some criteria, but they are real. They're not stranded to sea. They're real barrels that we can extract. Looking at our Adjusted EBITDAX in 2019, $350 million-$2 billion, quite a jump in five years. The strength of the balance sheet, a leverage ratio that went down significantly and puts us in a very, very strong position. The U.K. is our home. We're consolidating people in Aberdeen as well. This is where our expertise are. This is where our main asset, which is our people, but also our offshore assets. We have 38 of them. Production, we've covered. We have a resource-to-production ratio of 17 years.
I think a really important thing that this business combination gave us is we have no asset that contributes more than 20% to our portfolio in terms of production, which means that even if things sometimes go wrong and in our business, it could happen, even though we're really focused on that, sometimes things could go wrong. We have a very strong buffer on production. I think that's, again, one of the benefits that we're seeing of diversification. You're seeing the map here. We have a diverse, high-value U.K. continental shelf of scale and quality, which also makes it difficult to add accretive assets. We're being very selective when we look at them, and we'll speak to that when we talk about our inorganic growth.
Since the U.K. is our home, and we're looking into the future, this is just to give you a snapshot on how we're seeing the kind of U.K. structural supply and demand. Ithaca will be a long-term player in fulfilling and playing into that gap. There is a structural supply deficit. We believe the U.K. should invest and look at energy security. We think Ithaca is a key player on that. We also, at the same time, subscribe and believe that we need to be a responsible operator from an environmental perspective. We're focusing on that. We're looking at our new developments, Rosebank, and in the future, potentially Cambo. This is something we're giving a lot of time and effort to. Here you could see really the part that the North Sea can play into this supply and demand deficit.
I like the next slide a lot because I think it gives, it's really when you run an E&P company, this is what you want to have, right? You want to have stability. You want to have predictability. This is based off our CPR. It does not include our JAPEX deal of yesterday. It shows you our ability to plan, our ability to look into the future, and our ability to commit to things that we're committing to here. For example, our distribution policy. We're kind of roughly at 100,000 barrel plus for the rest of this decade. This is just from our organic assets and current assets and obviously organic growth. I said earlier, our 2C numbers are economic and viable. We believe that we could develop it under the right conditions. We're focusing on high-grading investor opportunities based on returns.
When you look at our CPR, you're seeing the cost control. You're seeing the stable production. I think this puts it in a really good position to grow from here with additional growth. Again, this is a theme that's going through the presentation because we believe the deal that we call transformational really is transformational. We're seeing the immediate benefits, obviously scale, diversification, balance sheet enhancement, cash flow generation that enables us to distribute back to our shareholders. We're seeing the synergies very quickly. We did a really good job. The team has done a really good job on integration. Julie will speak to integration later. Most importantly, we're creating a platform that investors can rely on, that we could take forward and create additional growth and sustainable returns. When we're looking at our strategy, we're going to talk about those kind of four pillars. Oops.
Sorry. On how we sustain and optimize production, we have optionality in our portfolio, right, from our producing assets, our development assets, our pre-development assets, and also sometimes some infrastructure-led exploration that we'll give an example for as well. We can unlock those material organic growth. We're seeing ourselves as a potential consolidator of the UKCS, e.g., JAPEX as a good example yesterday. We are looking at where can we go next. This is not something immediate, but we're very focused on looking at opportunities that we can expand our portfolio outside of the U.K.. We'll speak to that a bit later. Here, you're looking at the beginning, the first transformation with Chevron and Siccar Point, a second transformation, and the business combination putting us really at a very comfortable position, sustaining and optimizing our producing assets, unlocking additional organic projects, and deliver on our M&A growth.
Before I hand over to Luciano, just really a few points on this. We're focused on excellence. I said earlier, Aberdeen is our home. Our team is there. We're a center of excellence. We're investing in our people. This is something that's very important for us. That slide that I like, maintaining the plus 100,000 barrels per day production, gives you the predictability, the ability to plan, and where you're sitting in our seats and looking into the future. This enables you to allocate capital to try and weather any storms or things that could hit you potentially. We think we're in a very good place. We have a lot of flexibility.
When Iain speaks about capital allocation later, you'll see the available liquidity that we have that could really shelter us also from an unpleasant situation, but also give us a lot of firepower to grow our business. Luciano.
Good morning, everyone. I will focus on the first two pillars of the strategy that Yaniv talked about, sustaining production and, in fact, growing on our portfolio. There are a few takeaways that I would leave you with today. One is, as we've already said, we have exceptionally strong foundations, really exceptionally strong. We have an excellent portfolio, which is diversified, and we are focusing on enhancing our operational ability. This is going to put us in, A, doing all that we do with responsibility, having safety at the center of all what we do, and aiming at hitting the top quartile production efficiency.
That is where we're aiming to. The second takeaway is we have several organic opportunities, as we said, viable and realistic that we can build our growth on. They are high return and low risk in field campaign. Odin will speak about them. We have good quality greenfield projects that we can develop and an effective influencing strategy with our partners to have them also deliver on their facilities. We have seen already signs of that. It has already delivered in this way. On top of that, we have a material size of resources that we can talk about. We are the second independent for 2C in the basin. We talked about the foundation. There is a 100,000 barrel per day plus basis on which we can build our growth. This is just in itself a fantastic portfolio that allows us then to be stable.
On top of that, we build a significant amount of activities that are already sanctioned, which are indeed investments that we are carrying on. There are a number of activities that are in operations in which we can do infilling and we can do enhancement on production. On top of that, we have opportunities for our growth for projects that we still need to sanction. We're talking about the FOTLA, the Tornado, the K2 project that come up. We are going to add additional production through that segment of project that we have. In some cases that we've seen, they're pretty obvious. The Talbot one, for instance, that was put in production in November last year, or even the Jocelyn one, discovery done in December and put in production just a couple of weeks ago.
This is the low risk and infrastructure-led type of opportunities that we have available in our portfolio. That is why we are comfortable that we have a pretty sound outlook of production growth in our hands. Now, let me take you for a minute into our office if you want. We've talked about enhancement of operational performance. This is a similar screen of what is shared with our workforce on a daily basis. We have defined in December what we call the perfect day. The perfect day is the day in which we do all what we have said we did. We don't have an event of process safety or of personal safety. We hit and go beyond our expected production for the day. This puts the minds of the people around the focus, which is, in fact, delivering what we want to deliver.
Talking about it allows the workforce to be really focused and presenting that on a daily basis. That is the enhancement of our operational ability, which is not just measuring it. It is also talking about the things which are at the basis of it. What are the actions that we need to put in place to make sure that we prevent those events that then would allow to create some downtime? All the actions which are, in fact, towards uptime and towards making our operation safe. The best way to represent it is, in fact, with the performance. As we have said, we have already had a clear Q4 with an enhanced production efficiency. This is, we are seeing, going through into 2025. I do not need to tell you the benefit of that are obvious. This is clear.
A 1% of production efficiency more brings at the end of the year close to 400,000 barrel per day. Sorry, 400,000 barrel overall. That means that we can, in fact, bring all this value straight to the bottom line, making our CFO particularly happy. That is easy. It does not require any specific investment, just focus, just attention. How we do that is not just by talking about it. We do that because we have a structured approach. We look at our historical performance. We identify the areas where there is need for improvement. We look at all the locked-in options that we have, and then we optimize production. We looked at the third-party constraints that we have in place, and we tend to remove it. We look at the duration of the turnaround maintenance, and then we make them shorter.
In that, we use significant experience that we can bring from our shareholders after the business combination that allows us to have an experienced workforce, experienced people to look into our predictive maintenance and predictive activity. By having all those actions in a structured way, this allows us to get the performance that we actually want. We talked about our portfolio time and time again, but this gives the number. I mean, this is pretty self-explanatory in itself. We have significant good opportunities. They are good in size. They are good in length. This is impressive 17-year of ratio production, resource-based production. This is something which is not typical. We also have more than that, which is more than half, which is operated. That gives us control. It makes us decide when to spend, what to spend. We have the optionality. It is material.
We are talking about, in fact, as I said, the second independent for resources in the basin. This is what is at the basis of why we think we're so comfortable with our production growth, because we have strong basis, and we have strong assets, and we have optionality. If we look at it, the optionality goes all across the board because we have initiatives that we can do real quick, really short cycle infilling, enhanced oil recovery. We can work on compression pressure. These are easy to go, low risk and high return. Odin will talk about them again. We have a number of initiatives which are infrastructure-led. We can, like the, as I said, the K2, the FOTLA, which is a relatively close to infrastructure field to be tapped in, or the Tornado, which is a field that we have with Shell.
We have a new set of assets which are, in fact, the bulk of our 2C resources, Rosebank, which we are investing, and then Cambo, which is a project we are refreshing, looking at a better and more economic way to develop it. Of course, as I said, Tornado, which is a significant gas field with Shell in the West of Shetland. All in all, we can deliver value all across the segments of the oil and gas value chain that goes from exploration to development to production. We can build on the ability that the business combination has delivered to us, and we can create value in all those segments. Exploration, to talk about it, we have had five successes in the six last infrastructure-led exploration that was conducted. It is already a good basis.
When we come to development, as I said, we are looking into the possibility of refreshing our Cambo project and making it a more remunerative potentially initiative. K2, we've just received the approval for the concept selection, the consent for the concept selection. We are aiming at sanctioning it towards the end of this year or the beginning of next year. In next year, we're going to have again Tornado and K2 also in the pipeline of projects that we can develop. All in all, we have a strong basis. We have experiences. The business combination provides us what we said, the capability of a major and the agility of an independent. That is how we intend to invest in our assets to grow. Odin can come over and talk about our assets in more detail. Thank you.
Good morning, and thank you, Luciano. It's a pleasure to be standing here as a CEO for this company and be talking about our production and how we are sustaining and optimizing the production from our existing assets. We have the pleasure, or I have the pleasure of managing a portfolio with some really significant still assets with material production and longevity going forward. That is a quite unique situation to be in as a CEO. Let me first start with talking a little bit about Captain. Captain has been around for a long time. It has now been in production since 1997, and it is still running. We are just coming out of the enhanced oil recovery Phase II, where we have been in where we are injecting polymer into the reservoir.
This is very much front-end technology, but we have been doing this for a while now and are still making progress within this technology. This project was delivered on time and on budget. That was the hardware part of the project. Now we are into the phase where we are injecting polymer into these wells. Even though we have completed that project, we have still many years of running room in Captain. That is why we need to continue to invest to make sure that we're able to extract all the oil out of this field that we can. That requires also investment into equipment, making sure that we safeguard the lifetime of the field. The kind of key areas where we are investing in now and also in the kind of midterm is, first of all, we have recertified our drilling rig.
We are now drilling what we call the 13 campaign. That campaign consists of four new wells, two workovers, and one pilot well. That is only the 13 campaign. We will continue, and there will be a 14 campaign, and there will be a 15 campaign, taking drilling continuously into 2030. I mentioned the polymer injection. Yes, we have completed the kind of the hardware part of it. Now it is about getting all the polymers into the ground. That requires that the whole chain from the logistics side onshore all the way into the injection offshore needs to work perfectly every day. That is what we are focusing on now. It is very encouraging to see now that it is early days, I have to say that, but the kind of the initial signs that we are seeing from the first two patterns are very encouraging.
We are actually producing more oil at this point in time than what we had expected in our business plan. This is very encouraging. Lastly, I will just highlight that we have secured the flotille. The flotille is coming in to start up in early June. This flotille is necessary in order to liquidate maintenance backlog, getting some improvement projects running like the flare gas recovery project. Most importantly, it is there to give us the flexibility with the right number of beds available such that we actually can do both maintenance activities and also the value securing activities by being able to run the drilling rig going forward. I just also want to leave with you that Captain going forward and the way we are chasing and maximizing recovery, it is not only about the EOR project.
We have a very big stock of wells already producing, which we call the base production. We have the new infill wells that we will be drilling in the coming years. We have the, like I said, EOR 2 project. The EOR 2 project also has a continuation in 2027 where we will have a subsea campaign kicking off and kind of then going after what we call the second line producers on the EOR 2 project. Moving on to Elgin Franklin, massive field. This is probably in 2025 our biggest producer. It will probably produce more than 20,000 barrels on average for the year. Big field, long lifetime. New infill wells are coming. It is, like you can see, it is material resource and resource holders for us going forward.
We have in this asset been quite deliberate over several years through all the acquisitions that we have done and continuously improved and strengthened our equity position. We now have 28% equity in this field, the second largest equity holder. That also gives us a different leverage. We can apply our influencing strategy and make sure that we really are able to extract all the value out of this field that we think is still sitting there. Moving on to Cygnus, it's a pleasure for me to again get this asset into my portfolio together with the organizations that are coming over from Neptune Energy as part of the combination. Great field is the biggest gas field on the U.K. Continental Shelf. Obviously, super critical for the U.K. energy security. The good thing is it has still running room.
Last month, we approved another infill well. We have now actually been able to join up three infill wells that we'll be now executing in a campaign. The Jacob rig has just arrived on the field, and we are expecting to spread imminently on this campaign. We are at the same time continuing to work up new targets for infill drilling. We expect to have another campaign lined up not too far distant. Of course, this is a great asset from a CO2 intensity point of view. It has a low intensity and will thereby, as it is a big producer, also reduce our overall emission intensity. The J area is an area where we have strengthened now our foothold through the combination. It is an important place to be because there are still opportunities here.
We have seen that materializing recently through, first of all, the Talbot field that came on production just before Christmas, early days, but still producing high-value barrels to us and maybe a little bit more than we had expected. We have also just made a discovery before Christmas on the Jocelyn South exploration well. This well has also now started up production in the middle of March. That is some achievements. It is only three months after the discovery actually was made. All credit to the operator for that. We have also finally just approved another infill well here called the Duty Eastern Flank well that will be drilled in 2025 as well towards the end. We also think that this is an area with several fields where we think there are areas for improvements and more barrels to be gained by better performance altogether.
Rosbank is the biggest field on the U.K. Continental Shelf. It is still not on production. It is a field which is, again, a pleasure for me to be working with. You can see on the picture it's called Petrojarl Knarr. That was the name, and it was in my portfolio earlier on when I was working for Shell and it was operating on the Knarr field in Norway. It was a field that was when it was started up. It came in, struggled the first year, but it had an amazing improvement journey. It ended up as sustainably one of the best performing assets in the Shell portfolio. I am again looking forward to working with this vessel and with the Altera organization behind it.
On the progress on the project itself, it is now, like I said, it has been now, the vessel has been converted. It is now called Petrojarl Rosebank, and it is now sitting in Dubai where it is now being modified and upgraded to be able to operate the vessel Shetlands and do the job for Rosebank. The project so far is progressing well. Also, the subsea part of the project is having good progress. Key installation of subsea infrastructure was put in place last year and all completed ahead of plan. The project is overall progressing more or less according to plan. Also, like indicated by Equinor, they are maintaining first production towards the end of 2026, potentially early 2027. You can see in the picture here in the right-hand corner, at least you can see the back of Luciano and Yaniv, I think. Okay.
It was a good visit. We went there together with the executives from the operator and also the CEO from Altera and Aker Solutions, which are key in the delivering of this project. I would say that we were having a good feeling when we left, being able to be there talking with the people, getting a feel for that and the smell of the site and getting a little bit more behind everything which is going on there. I think it gave us a good feeling. Everything is not, of course, there are still uncertainties and still progress to be made, but I think we are heading in the right direction here. Of course, the big issue that has been kind of hanging over Rosebank lately has, of course, been the Fink ruling.
I will let Julie take us a little bit through the outcome of that.
Thank you. Good morning, everyone. Lovely to be in this beautiful room today and also to see a couple of faces in person that I do not think I have seen since the IPO. Rosbank judicial review, Ithaca is no stranger to a judicial review. Our Vorlich Field was in the English courts and the Scottish courts and all the way to the Supreme Court by way of judicial review. It is not a new process for us, but we were an active interested party in the Rosbank judicial review. We very much welcome the ruling that we got. The prospective nature of the consent remaining in place to allow us to continue with the project was good news for us.
We can continue on and Equinor as our operator remained very confident that the project's on track and as we've heard with first production targeted for the end of 2026, beginning of 2027. Really good news on the judicial review front. When it comes to scope three, the government committed to be fully engaged with industry on this. We were an active participant in the consultation, not only as Ithaca as an entity, but obviously through our industry body, OIUK as well. We're waiting for the guidance, which is due out in spring. Once we've got that guidance, we'll work closely with the government to submit that and move on to get our new consent in a timely manner. Overall, good outcome for us, I think, on the judicial review front.
Okay, thank you, Julia. I will finish off by addressing some ESG topics, starting with HSE.
Of course, it's super important and fundamental for our operation to be a strong and safe operator when it comes to HSE. The main message on this one is just to make sure that you're taking away that we are on a good journey when it comes to both personal safety, shown on the left-hand side, and process safety on the left-hand side and personal safety on the right-hand side. We are on an improvement trajectory. Those trajectories are continuing into 2025, but this is an area where we cannot rest. Every day has to be delivered without incidents, and that is our mindset, and that is the way we are working. Moving on to our focus on decarbonization, I would say that currently, today, we are running a solid business.
We have a taking benefit now of getting Cygnus into our portfolio, and we are now operating at a CO2 intensity of less than 20 kg CO2 per BOE produced. Really, what will be transformational as we are going forward, whilst we are maintaining as a reliable supplier of energy to the U.K. at these kind of levels, it is that we now will be phasing out some of our really late-life assets with a high intensity of CO2 emission, with bringing on now the Rosebanks and hopefully also Cambo as we are moving forward, high-end installations with low emissions through high application of new technology, and maybe even lower if they were to be decided to be electrified.
That will put us in a position where we think now that we are having a good trajectory to be able to meet our 2030 commitments towards the North Sea Transitional Deal or being able to reduce our emission by 50% relative to the 2018 baseline. Just so we are just again underlining that this is something we are doing every day. We are having value-led opportunities that we are taking moving forward with, which also has a CO2 reduction benefit, like the reinstatement of the secondary gas export compressor train, like the installation of the flare gas recovery system on the bridge link platform, and the fact that we have no reason to be sanctioning the upgrade of the power water pumps. All these happening on Captain, all of them bringing a reduction of up to 45,000-50,000 tons per year. I will close there.
Thanks, Julia. Maybe just to wrap this section up on organic growth, I think you need to appreciate the focus that M&A and inorganic growth are very glorious, right? They look great. Announcements. This is the day-to-day work, which is hard work. I think there is a real focus from the team on delivering this on a day-to-day basis. This is a focus that we as management have and the team is focusing on. Luciano mentioned this. The average efficiency in the North Sea today, NSDA reporting, is 77% efficiency. We want to be at the eight handle and obviously push as much as we can higher. As Luciano said, and I think that's a message that people need to remember, 1% of efficiency, that's 400,000 barrels a year, right? On our current assets without doing anything, without taking any leverage on, without any M&A.
That focus and the work Luciano, Odin, and the team are doing is really priceless. I think you can see this in our result. This is not coming from thin air. It's not like these assets suddenly producing more because they're in different hands. No, this is hard work on a day in, day out. I know some of our team are listening, so thank you for that as well. Now we'll talk about the glorious stuff. Our inorganic growth strategy and Ithaca, we saw this earlier, is growing through M&A, right? We're no stranger to the M&A process. We're doing this a lot. Our intention is to keep growing the business through M&A alongside our organic growth, alongside our organic growth options. Again, driving scale, driving stability, driving strength, strength in distribution, strength in production, strength in safety.
Key takeaways here, really just to cover this quickly. The track record, the material opportunity that we see still existing in the UKCS for further consolidation, JAPEX is an example, and we'll dive into this in a bit. We see ourselves as really ideally positioned as a lead consolidator, both from a fiscal point of view, but also from team and expertise and operational capabilities. We're looking at international M&A as something that would enhance our portfolio. We're going to be very selective and rigorous on this. We have clear investment parameters that we'll outline here in a bit. These are kind of the four I's, to be honest. The first I was supposed to be vision, but it didn't work well, so we said, we'll imagine. It's a vision, but we imagine, right?
We have a clear vision of where we want to go, what we want to do. I think the second point is we identify. We're doing a lot of work and rigorous screening, and we have a really good team working that. We implement, and this is where we're very proud of how we're doing this. JAPEX is an example. Not every deal can be transformational, but every deal needs to be creative, small or large, and this is what we're focused on, looking at assets that we like, that add to the bottom line, that meet our investment criteria. We're going to keep looking and doing that in the UKCS. We integrate. Julie will talk about what we did with integration in the last six months. It's hard to do M&A. A lot of companies don't succeed in doing M&A.
I think we've cracked this. We know how to do this. We proved this in the past. It's harder to integrate. You bring in assets, you bring in people, you bring in cultures. Just think about this sitting where you are, just how to implement. IT is an example, right? It's an offshore. It's complicated. We have the team and the capabilities and the expertise to do this. I think we did it well and integrated well, and Julie will talk to that. As I said, there's a range of things that we can do, right? There's the transformational deals that historically Ithaca has done, from Chevron to Siccar Point. There is consolidation deal, recent one being JAPEX, right?
This is kind of the type of things, the bolt-ons that add value immediately, that we understand well, that does not take us a lot of time to execute, that strengthen our position in the asset, right? Going from 35% to 50% with only two working interest owners, that gives you a lot more control on the operator, on budget, on other things. This is really important in our business. Obviously, the combination type transformational events that we have looked at. Looking at our investment parameters, we want to deliver both value-based growth and yield. As I said earlier, you will see our capital allocation framework later, and Iain will talk about this. We believe we can deliver both. Delivering balance across our oil and gas lifecycle, sustainable production and cash flows, maintaining a responsible leverage ratio of not more than 1.5x of EBITDA.
I want to be careful here, so do not quote me saying we are going to be 1.5. No, this is a ceiling, and we might get there temporarily to get something done, but this is not where we want to be, right? We proved in the past as well that we can lever up and lever down and structure our balance sheet to accommodate the type of transactions that we want to do. Framework of assessing opportunities. You can see this here. We are looking when we are buying production at more than 20% internal rate of returns, so 20%-25% IRRs, assets that pay us back on the investment in one to four years with operating cash margins that are accretive in two to four years, DPI distribution paid in greater than 1.3.
When we look at the full cycle, and this is important, this is kind of full cycle break even, right? We're looking at $30-$50 per barrel, gas at GBP 0.40-GBP 0.70 a therm, and obviously being emission compliant. This is the type of things that we would look at. Ideally, we want to tick all the boxes, right? Ideally, that's what we thrive to do. If we tick five out of the six, it's good enough. We are focused on that. Julie, you want to say a few words on, yeah, come on.
Yeah, I think Yaniv's covered some of this already, but I've been with the company for just over five years, so I've seen most of these deals come through the integration process. I think Yaniv's right.
You can say it's hard to do a deal, but it's definitely harder to integrate, and there's a huge importance in that. We talk about operational, financial, and fiscal synergies when we do a deal, but really, it's the systems, the people, and the culture that's at the heart of our integration. That's what we focus on. We start thinking about that during the interim period and then beyond once we've completed the deal so that we really understand the benefits of the efficiencies of integration, and that's really our focus. We do have a proven track record here. At the moment, we have got a reorganization ongoing. I think that's an inevitable consequence of the business combination, but it's not transformational. It's really about getting the solid foundation within our business that allows us that future-facing transformational growth and that sustainability. It's onshore only.
Actually, the amount of redundancies will be very limited going forward, but it's really about having that solid base. We've used the word dynamic a lot today, but I think it is about having that dynamic organization that can really see the future going forward. Thanks.
I mentioned earlier our kind of investment criteria, and I think these are really two good examples of how we view the world, but more importantly, execute. For me, JAPEX is really a classic example of the type of things that we would like to do and really using our expertise and our team and our position in the assets and assets that we like. The machine is working, right? We came out of a transformational deal. We keep looking, we keep growing. This is the message that we want to deliver to you as well, right?
We're there, we're active. UKCS is our home. We want to be a consolidator, but we're going to be selective. We're going to look at things that are creative. If you're looking at JAPEX as an example, yeah, delivering on a U.K. consolidation strategy, high quality, single field, long life assets, adding 4,500 barrels per day of production, 2025, obviously cash generative into the mid-2030s. We are inheriting a loss position that comes directly from JAPEX investment in these assets. We have tax losses of $250 million and 105 of EPL, effective date January 2024. We expect completion of this asset to be in the second quarter through June 30. If you look at this, tick IRR, tick payback period, tick operating cash margins, DPI, break even, and emissions, this is the type of things that we want to do.
We want to tick the boxes on our investment criteria. J Area, an organic opportunity that we've acted on. Luciano and Odin mentioned that. Again, we increase our interest in J Area through the combination. Talbot, first production in December 2024. Odin mentioned that we had a successful exploration drilling in Jocelyn South with a very quick turnaround in less than three months. Yeah, less than three months. We started producing in March. This is the type of things we want to do. Not glorious. Not everything is glorious, but the business is performing and performing well. This is the type of, as I said, opportunities that we want to focus on. Iain, we're getting to the dessert on guidance. Iain?
Thanks, Yaniv. Right. We will close out with some summaries on the capital allocation framework and then the guidance.
Those of you who've been following us since IPO will recognize this. Okay? This is our guiding frame. It's our kind of guardrails. Really, every stakeholder in the business has some interest in this and helps everyone understand where we're going and what we're doing. This is what we said we'd do, and it's what we've done. Generating significant post-tax cash from operations, this is about production. It's about cost per barrel. It's about low cash taxes. That's what generates the material cash flow that allows us to, first of all, invest. This is sustaining the business. Over 100,000 barrels a day. You've seen the organic capability within the business to invest. That pipeline didn't just come about. We've built it. We built it through acquisition. We built it through investment when there was lots of uncertainty. There's a great slide in there.
I don't know if you saw it where we were taking a rig out of the Cromarty Firth when it was packed with the rigs during COVID when no one was exploring, and we took the rig out and we drilled the Fort Leigh Exploration Well. That's one of the near-term tiebacks that we're looking to FID in the short term. It's part of the pipeline. We continue to invest, and we continue to invest today. Maintaining capital expenditure, protecting the business, keeping below one times net debt to EBITDAX, that's about EBITDAX protection. It's about hedging well. It's about managing our costs well. It's also about making sure that we protect through leverage and through the appropriate financing of the business, which we've shown we can do during 2024. Return.
We announced today we declare the third interim dividend for 2024, $200 million, total of $500 million for the year. That's what we said we would do. We made targets at IPO. We delivered them. We made guidance and targets for this year. We delivered them. That's what we plan to do. As we look ahead, that solid business base that we have enables us to look ahead with confidence on the delivery that we've committed to. Cash flow to evolve the business. Actually, in the last year, we've used additional cash flow from the business to both yield additional distributions with a special dividend in December last year, but also to grow in the announcement of the deal. Yesterday is another example of bolt-on growth, extend M&A, maybe not exotic M&A, but this is about high-quality assets.
When we see the opportunity to deepen in quality assets, we will. Elgin Franklin, we've come back three times to buy more of that asset because we like it. We see the longevity. We see the value. A little bit more on each of these. First of all, operating cost, which underpins the cash flow of the business. You'll see that in the guidance today, we're looking at a $20 per barrel target for 2025. The CPR numbers are here on the right-hand side. The CPR, for those of you not familiar with it, is an outside view of our company. They will always have a marginally different view in different years and different assets, but we recognize the trends and the reserves and the values, and we're very comfortable with the CPR outturn.
What that shows is exactly what we expect in our business is to keep in the low $20 a barrel OpEx for the next several years. In fact, we have run room to go out many years. Here's five years out. The CPR tells you you're in the $20-$22 a barrel position for the next five years. Constant focus, keeping costs low, making sure that we deliver strong cash flow from our high production. There is capital investment. Again, we've announced guidance ranges for this year for producing asset CapEx and for Rosebank. A lot of interest in Rosebank, but of course, we're investing a lot, as Odin's mentioned, in an asset like Captain, for example. There are $70 million of polymer injection. This year, we expect to put into the reservoir.
That's long-term value that delivers a push through the reservoir and barrels for years to come. There are upgrade projects in Captain, and that all is part of the 2025 spend. We have three operated drilling rigs right now. We are in the Seagull well in J4. We have just taken the rig into the Cygnus asset, and we are also drilling on Captain. Beyond that, we have non-operated assets that are drilling in Chihale and Marner, etc. Strong capital program for this year, adding barrels, replacing production. Rosebank here with a 210 midpoint on the year. That is entirely in line with our expected trajectory. We always said around $200 million a year for three years, and that is what we had in 2024, 2025, and 2026. You see that CapEx drop off then in the CPR.
This is about appropriate, solid capital with optionality that we can respond to circumstances and opportunities, which is what we've done. Right, hedging. Love a bit of hedge boosting. $400 million of gains for the last two years. We spend a lot of time on this because it delivers real value for us. Our targets here in the short term have always been to be 75% protected on the downside and 50% exposed to upside. We continue to build that program. We have varied it during the year, actually. The volatility in the markets in both oil and gas still remain at relatively historic highs. That means that put options, particularly which used to be part of our history as a company, are very expensive. What we've been doing is moving into wide collars.
We set a floor and we take some of the upside away, but we still have extremely good headroom on hedge books. As we built through the year, we've adjusted our strategy in the fine-tuning of it, but the basics and the commitment remains. This is an example of it. This is our gas book. Gas volatility, particularly, has been a feature of the last few years, obviously. What we do is we hedge at the peaks in prices. When we like prices, so when gas was up in the 120s, 130s, we hedged in material volumes. When it dropped down during the year, it was in the 80s, pence a therm. We didn't do any hedging for, I think, three, four, nearly five months at one point. It's about going big on hedge positions when we like the prices.
Right now, we're hedged out in gas through Q1 2027. You can see material hedge positions on both swaps, collars, and wide collars. This is the kind of summary graph here. If you can understand it, what it says is that we're swapped at about GBP 1.00 a therm right through to Q1 2027. We have collar floors at GBP 0.80 up to over GBP 1.00, and we have wide collars of GBP 0.80 up to GBP 1.30-GBP 1.40. On a volatile gas backdrop, we're very comfortable with the hedge position. As we see opportunity, we'll continue to build that. Protecting the business also involves management of our tax position. We close out the year with $5.5 billion of corporate tax and $4.7 billion of supplementary charge loss positions in the group, efficiently structured. That will be augmented, of course, by the JAPEX acquisition as it comes in.
This represents capital investment in the UKCS over many, many years. These capital loss positions represent the Monarch Field Development, the Rosebank Field Development. These are high-quality, long-term CapEx investments that shelter us in the short term from cash taxes. We also have in the business a cash tax-paid corporate history of $6.3 billion. That's really important because the decommissioning carryback relief requires you to have the cash paid historically in the business, which we do. We are working constructively with the government on the new tax regime for the U.K. There are three consultations ongoing just now on licenses and emissions and on tax. We're having lots of constructive discussions. The aim has always been from the previous government and this government to get back to a lower, more normal regime. That is the aim. We're working with the government on that.
Decommissioning costs, again, something which in the business we have to manage and to work. We are protected by the fact that we have low decommissioning costs in the near term. Our trajectory of decommissioning costs, it's all about executing responsibly at the right time. We have the Alba field and the GSA field, both fields that have had a long history with the company and which we are very proud to have stewarded through to this stage of their life. The time to decommission these has come. We have a lot of material activity, actually, in these assets. Given our equity share and the structure of the decommissioning program, a relatively small spend. A lot of activity, a lot of experience, a lot of work to do, but low net cost to the company over the next few years.
Our decom program is about $100 million a year for the next five plus years. We enhanced our liquidity position, our credit position during the year in the refinancing, gaining over $900 million of letter of credit facility secured and unsecured as part of that refinancing package. Returns, not a lot to say here. We said we would deliver returns. We have. The strategy has been executed, and we have moved through with the agility that we have talked about to ensure that we can do this. Our target for 2025 continues to be $500 million, 30% post-tax cash from operations commitment like we made when we announced the deal with Eni back in April last year. Long-term policy, 15%-30% post-tax cash from operations. We think one of the clearest policies in the market.
We're able to do that because of the business we've built, the quality of the assets, and the outturn options we have for production. This is on the CPR and gives you a bit of a wider look at the business. As we said, the shape overall of the CPR and the average positions for the next several years we recognize. You can see on the left-hand side material cash flow generation. The CPR is run on the NSAI price tag that they choose. It's $80 a barrel and GBP 0.85 a therm that this one's run on. Very similar results when you have $70 a barrel and GBP 1.00 a therm. It's in the kind of market expectations as we look forward. We have about $10 billion of revenue less OpEx coming through on the CPR for the next five years.
Pretax cash from operations of over $9 billion. An average tax per annum of $0.5 billion is estimated in the CPR on a simple flow-through method. That gives you the kind of material cash from operations post-tax that we see coming out of the CPR position through which we can invest, the sustaining CapEx that we've talked about to stay above 100,000 barrels a day. We also have material leverage capacity as Yaniv's referenced. We have managed this business carefully and well and protected it, delivered and grown. We have leverage capacity. This is what gives us the optionality here around returns, but also around growth through optional organic development and also inorganic deals like we've just seen yesterday with the announcement of the JAPEX deal.
Very strong cash flow pipeline, strong protection on the cash flows across EBITDAX and cash tax, and lots of optionality through leveraging and also the cash of the business to yield and also to grow. Right, the guidance for the year, which you'll have seen this morning come out, and very glad to announce 105-115 as our production range, the 110 midpoint with OpEx of $770-$850, and the midpoint again takes you to $20 a barrel. It's where we want it to be. It's what we're aiming at. We're glad to announce the guidance at that today. Continued material capital spend, $560-$620 million. Now, both the production and that net CapEx includes the JAPEX deal assumed to complete from 1 July. So an incremental production from 1 July, and then some additional CapEx on the Seagull Fourth Well.
Rosebank CapEx, as we've outlined, at a $210 million midpoint for the year, cash taxes in the mid-$250 million, and then the dividend target of $500 million. On the right-hand side, this is the CPR outturn view, which gives you the shape going forward. We are looking to maintain production above 105,000 barrels a day in those scenarios. Again, the low $20 a barrel position. On a five-year average out there, still $600 million of capital potential organic through those next four years. As an average cash tax calculated on those prices at $500 million per annum average. Dividend commitment and target exactly like it's been since IPO, 15%-30% post-tax cash from operations. A strong set of guidance numbers, a strong set of midterm outlook numbers from the CPR, and we go into 2025 with lots of confidence and lots of oppor tunity. Yaniv.
Thanks, Iain.
Just to wrap this up, we give you the 2025 guidance, kind of medium-look CPR-based outlook. I think the capital allocation framework and the slide you showed before is really important in how we manage our business and the flexibility we have across our different elements of the business. I know I'm conscious of time and we want to leave time for Q&A, but just to really some points to close out and summarize. Messages we delivered, I think, on every parameter this year, 2024 was a really good year. We've delivered on our promises. We intend to do so in 2025 as well. The transformational business combination, strong performance against management guidance that we're very proud of. Rosebank progressing as planned, as you've heard, the refinancing and the strength of a balance sheet that gives us the flexibility to grow our business and maintain our distributions.
We do have an appetite for value accretive, consolidation, and growth in the UKCS. As we mentioned, we're looking internationally as well at the right places to be in and the right opportunities. We're focused on distributing back to our shareholders. We definitely see it as an important goal. Really to close out, sustaining and optimizing medium-term production. I talked about this. We're focused on efficiency. We're focused on cost, significant cash flow generation. We're capital disciplined and something that we're highly focused on, which allows us to really look at the oops, I didn't move this. Sorry. Which really allows us to deliver on the last point here and tick the box on organic and inorganic growth and at the same time sustaining our distribution back to our shareholders. We're going to take questions. I'll ask the team to join.
Before that, I want to thank our team. I know some of them have joined online. This is the work of many. I would like everyone to thank them for their contribution, not the presentation. I mean the business. Obviously, the Ithaca team that's present here today. I'll say a special thank you for Catherine for this as she didn't sleep for the last week. So Catherine, thank you. And for all of our advisors and brokers, thank you very much for your support. Team, please. Go ahead, Saikrishna.
Hi. Hi. Saikrishna Tuduru from Morgan Stanley. I had two questions. The first one is on the target to maintain production over 100,000 barrels per day.
Could you speak closer to the microphone?
Oh, sorry. Yeah. Now, the first question, I just wanted to understand more on your ambition to maintain production over 100,000 barrels per day.
I was just wondering if this was compatible with your organic acquisitions as well in the sense should you were to proceed on that front, would you still keep maintaining it? Is there a possibility that there would be an increase in that base? I just wanted to check your ambition for that production level. The second one related to on the CapEx front, of course, you highlighted the CPR CapEx, which is kind of rolling off as we go later into the years. I suppose production is also rolling off if you were to go beyond 2029. It seems to be a little bit more significant. Just wondering, what's the right level of CapEx to maintain this production on a consistent basis till the end of the decade? Is it the current level that we see for 2025?
Iain, maybe I'll address the production point and you could speak to CapEx. Saikrishna, as mentioned, if you remember the slide on kind of production profile and optionality. This is what we see is from our current business, excluding, by the way, JAPEX, for example, or any bolt-on acquisitions, big or small, that we're going to do in the future. This is the production we're seeing from it's reflected in CPR, but this is the production levels that we're seeing in the medium term. This is without any special additions. This is the portfolio that we have right now. That slide specifically excludes the JAPEX acquisition, but our guidance does. It kind of gives you a sense on the production levels.
Sure, yeah. I mean, on CapEx, I mean, that production profile we're very happy with, right? Okay.
The shallow nature of the decline in the 2P reserves is testament to the portfolio that we've built. I think if you look at the CPR, it does not go below 100,000 of the 2P reserves until 2029. That excludes 2C projects like Fothler, which is a simple tieback to Britannia that we are progressing and fully expect to bring to FID. It will be tied into the Alder manifold. It is a very straightforward tieback. That excludes Tornado, high-value gas, West Shetland. Again, relatively simple development that we are working with Shell. Those are two examples of 2C projects, excluding K2 and others, that are very easy to FID in the coming couple of years, relatively low CapEx in the kind of low hundreds of millions.
Therefore, that $600 million kind of average for four years that you have there in the CPR, it does not need to be augmented much at all to keep you out 2029, 2030. Of course, you are looking beyond that with bigger projects.
Dan.
Yeah, Dan Slater from Zeus Capital. I just wanted to ask about the ongoing consultation with the U.K. government on tax. Obviously, it has only started recently, but what can you say about how that is going, what it might end up looking like, the sort of things this industry are discussing with the government? Also, once the consultation actually concludes, how long do we think it might be before the government actually announces what that new regime is going to look like? When do you think that might potentially be? Thank you.
Maybe I will take that quickly. I do not want to speculate on government.
Done that before, doesn't work. I'm not going to speculate on how it's going to turn out. I think one thing I can say is that on consultation, but also previously on the budget process, they were in listening mode. They were listening to the industry. They didn't accept everything we've said, but there was engagement, I think a genuine one, which I believe is a positive. They're willing to listen. I think the consultation here is critical for future planning. You're looking at projects that need to take FID with first oil at the end of this decade or early 2030s. Without that clarity on what the post-EPL world looks like, you can't really take an investment decision on that. In terms of timing, again, they've said through the summer, yeah, innocent till proving guilty. I think they'll deliver.
I think that's something that we can expect that by the summer we'll have a sense. We have our ideas. We have different forums that we're expressing those ideas directly with the government and with the OU.K. and other bodies that we work with in discussion with our peers. Overall, speculating on the outcome, I think, is worse than speculating on oil prices. I'm going to stop here. Sure. I think, Fern.
Yep. Thanks. Fern Wright and Pilhon. Question for Odin first on Cap and EOR Phase II. It might be too early to tell, but are you seeing anything in terms of voyage replacement yet and sweep efficiency coming through in the reservoir? Will you be carrying out 4D seismic to monitor that sweep efficiency over time?
I think that's a little bit early to say.
Like I said, the EOR Phase II, now we are seeing the response from the first two patterns out of six. We are seeing that the response is positive. We are seeing that the water coming back is reducing and we are getting more oil. We are seeing the encouraging signs, the signs that we expected. We will see when the remaining four patterns in this phase are coming in, which will happen towards the end of this year.
Maybe one for Iain on your credit rate. You have an ambition to get to investment grade. Just wondering what that means, what specific operational financial metrics, targets does the business have to get to to qualify?
Yeah, I mean, I would not describe it maybe as an ambition so much as it is clearly an option forward for us.
As Yaniv's mentioned in the development of our history, we've been very agile and responded to opportunity. A natural kind of pathway that we're on in terms of upgrades is investment grade. That's one of the reasons why diversification helps. I think in terms of the IG rating, the expectation that we'll have a diversified portfolio outside of just the U.K. is part of that. It's partly scale, it's partly diversification. It's also maintaining discipline and cost per barrel and also maintaining our path on emissions per barrel. Actually, the IG kind of markers aren't driving everything, but all those things are good things for us to do, to be bigger, to be efficient, to be low cost, to be low emissions, and in fact, to diversify our footprint.
All of those are good ambitions and they do lead towards an IG pathway if that's the choice that we make.
William Partridge from Perdix Capital. Can I just tie back into Dan's question about tax? On slide 20, you talked about supply and demand. What are those assumptions around supply? Are you implicitly saying Rosebank goes ahead, EPL changes? I mean, because it's quite a big band. Can you give a little bit more color around that, please?
Yeah, I think that was more of a generic slide rather than an Ithaca specific slide. Yeah. We have, yeah, Rosebank for us is there's no question mark around Rosebank. Rosebank is progressing. Rosebank is part of our plan, part of our CPR. It's not something that we question in any way, shape, or form.
For us, that's a but you're looking at Canberra, for example, that's something that following consultancy and seeing what the fiscal regime looks like post 2030, we're doing some work on optimizing the project and being more cost-efficient on it.
That's what I understand from that supply, generic supply slide. How much do you think is vulnerable to not happening unless the government changes and eases this out?
I can't quantify this, but maybe just to give a sense, I think that if there is a sensible outcome post EPL, it will be very difficult to get material projects off the ground into the future. That would definitely affect that outlook. Yeah, absolutely. Thanks. Chris Wheaton from Stifel.
Odin, a question for you.
Can you name three things you've made Ithaca do differently since you've joined as COO that's led to definite measurable improvements in uptime, operating performance? I fully agree with Luciano's view that there's uptime here for your assets if you can get from production. Obviously, every incremental barrel of production has high margins. That's great for the business. Could you just talk about what you've done differently since you've been in post?
Yeah, I think, first of all, we—
Don't be modest.
No, but I think there are very clearly a need to make it very transparent of where are we losing barrels. Everybody in the organization should be aware of where are we actually now losing barrels, what are the amount of barrels we actually are losing, and what are our bad actors.
It is about being very disciplined in eliminating those bad actors and making sure that the reasons why we are losing barrels are not reoccurring. I think having absolutely compliance towards procedures and chasing also the locked-in potentials. If you have wells that are sitting there that could have been producing for you, why are not they? Making sure that you are doing everything you can to quickly bring them on stream. I think it has paid dividend for us. I think that when you look on the potential we have, there is a potential to maybe gain another 5-10% in uptime. If we are able to get to that place, that is the ambition we should have. I mean, it is half a Rosebank field for us.
I think that is the if you can get the organization energized around that, I think that is, yeah, that's at least what's keeping me awake. That's like another 5-10% more production. I mean, that's what we should aim for, yeah. And
Chris, I think just to make sure you haven't missed what Odin said, right? You're looking at our kind of Rosebank investment and say on plateau, it's roughly 14,000-15,000 barrels per day of production, right? This increase of, you know, we gave the 1% example of 400,000 barrels a day, right? You do this 5, 6, 7%, even not reaching the double digits, you're at a half a Rosebank would be basically zero investment. This is something the organization is really focused on.
Great. Thank you. One other question, if I may, on Captain.
If you go back to the IPO CPR, where the business at where Captain is performing now is still well below, even on the slide you showed today, still well below where the pre-IPO expectations were. Could you help bridge the gap in terms of talking about production near-term being ahead of expectations, but still it's below where you were initially sort of two, three years ago? Is that 30,000 a day of peak production at Captain a conservative forecast? Is that a P50 forecast? Because it feels like the variation on that is going to be probably your biggest single individual field-level performance contributor to your overall production numbers over the next three years.
Yeah, I think if you look on Captain, I think you're absolutely right. Relative to the production forecast at the IPO stage, we are producing at a lower level.
We have definitely also been very clear now in the last year, making sure that we have a very robust and correct assessment of what we think Captain should be delivering for 2025 and also for the years to come. I think there has been a degree of overpromise and under-delivery on Captain, for sure. Many reasons for that. I think what is important now is to leave the impression and understanding of what we actually have been doing through the last year in the business planning process and really becoming robust on the promise that we have made as an organization and to the market.
Maybe just to add to that question in terms of the look back in IPO, because actually the reserve profile on Captain has hardly changed, right? It has been about timing of production.
I think what was the expectation was quite a peaky profile historically on the EOR2. The actual change in the EOR2 volumes and the overall Captain volumes and the reserve reports has not materially moved. I think that's where we, it's about timing. That's actually where the CPRs are really important documents. We're glad to release a new one today. In your specifics and all the details, we'll have different views on the trajectory and the overall outturn and reserves. We're all very confident. I think Captain's the same. Great. All right. Thank you.
It's Mark Wilson Jefferies. I'd like to ask on competitive landscape, please. You appear to be in a very unique position with the production of scale, material tax losses, and greenfield investment and stating to be a consolidator.
Who is the competition in that arena, if indeed there is any, for such assets? JAPEX is quite a unique tucking deal, if you like. You were in the same field. In terms of looking out at consolidation, do you see any other companies who are looking to invest or enter or consolidate?
Yeah, you know, it's difficult to, again, speculate on what others are doing, right? I think there is, I'll call it a renewed interest in the UKCS in the past. I think you'll agree with me in the past six months, right? We've had the, you know, we've seen the Shell Equinor thing. There's an EnQuest Serica, some sort of an announcement. I think it's buzzing.
I think the theme is companies are looking, understanding that scale is meaningful, that consolidation, especially when you're working in a, I'm not sure what you find it, not a very inexpensive basin, right? The North Sea is not a cheap place to operate in. You need efficiencies and you need to see synergies to make this work. I think the drive for consolidation, I'm sure we're not the only one who's seeing that. I think we're better positioned than others to benefit from that. I'm sure there are others who are sitting in a meeting room and saying, "Oh, what are we going to do next?" I think compared to others, we're agile, we're quick, we know how to move quickly, and we have, I think, the flexibility from both mindset, but also balance sheet to move on things.
I think that's where our edge is.
Just to follow on from that, the Canberra farm outs are on pause, but just to confirm, that would not be a project you would go forward with at 100%, just to check?
I think that we on Canberra, first, we need to see the outcome of the government consultation, right? We could see the economics out of it. I think our goal would be to bring in a partner that would be a meaningful one. Obviously, this is a meaningful project and a large CapEx commitment, so somebody who could be a partner in that, but also support us and cooperate technically, not just financially. Our intention is still to bring in a partner.
I think once there is clarity about the post-EPL world, Canberra will be an attractive project for companies that want to grow in the UKCS to get into, right? We have yet to see.
Hi, it's James Hosie from Shore Capital. I'm just going to ask you about your ambitions beyond the UKCS. Are you actively screening opportunities now, or is the focus just on what more you can do in the U.K.? How much freedom do you have from your two major shareholders in terms of where you can and can't look elsewhere?
Maybe I'll start from the second question. We have two, as you know, large shareholders, Delek Group and Eni. There is strong alignment on the path forward for Ithaca, which I think you saw here.
That means, yes, distributions and maintaining the business, and at the same time growing this business, understanding that this is a business that needs to grow from where it is right now. On the international front, we recognize that we will at one point need to go internationally for different reasons. We could, I'm sure you can all think of them. One of them is there was a question about investment grade from Werner on, and diversification is key, right? Single basin concentration is less favorable by the rating agencies. I don't know what actively screening means. We're looking at opportunities. We're analyzing. A new country entry is not something you do on a whim, right? We're trying to find assets that meet our parameters and investment criteria that I've presented. Definitely something we are working on.
I wouldn't say it's imminent or actively screening is a difficult concept for me. We get poked like every week on opportunities, but that's not the intent right now.
Hi, so James Carmichael from Berenberg. Just wanted to just bring it back to tax, I think. At the start, you opened up by saying that the 2C resources are viable and economic. Since, obviously, you said you can't take FID until we know what the fiscal regime is and that there's a sensible outcome. Just wondering what sort of other parameters you use to define a sensible outcome. Is it simply the headline rate? Is it the discussion around tax allowances? Or is it just that long-term certainty?
I'll let Iain answer. I'll just say it's about investment criteria, right? It needs to meet certain criteria. I think we've outlined them.
If it meets them, buddy, do you want to?
Yeah, I think you've seen that we've got a huge range of projects, okay? Canberra was at one end. The significance of the Canberra resource base, and it's the second largest undeveloped field in the U.K., that kind of level of capital commitment, you'd expect to kind of land long-term fiscal understanding given the consultation. We see that as a constructive process, and we see that as something that will come to a reasonable position, but it needs to land. Our focus is across our full portfolio, and I think we look at the pre and post-tax IRRs, and clearly our tax position, each company's got a different tax position, which also affects the investment return. This has to make sense to stand alone on an integrated tax position.
Given the quality of the assets that we're talking about, these meet our investment hurdles. It is about the allocation of capital and sort of the timing of the development, and it is about the inorganic options we have as well. One of the great things about having a strong organic in-house bench of options is that when you're looking at options to screen, you're looking at international or other U.K. options, you're screening them against a very strong base, and they have to be better. We understand tax really well. We spend a lot of time in all the tax ramifications, and it is just like every part of the world, okay? It is just part of the risk-reward management that you're looking at as you look for investments and projects.
Short payback projects are obviously easier to make in that context than long payback projects, which the likes of Canberra would be.
The competition for capital within the organization, right? You are kind of pitching for your project. Any questions online, Catherine?
To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We have a question from Matt Cooper of Barclays. Matt, your line is now open. Please go ahead.
Thank you very much. Thank you for the presentation. Just one from me, really. On Rosebank, when do you need to begin drilling the development wells in order to hit a year-end 2026 first oil date? What is your current expectation for when you will begin drilling?
Thank you. Oh, we didn't. Yeah, I think the plan is to start drilling in Q1 next year. That is the plan. And Equinor is set up with drilling capacity in order to deliver on that. Bear also in mind that the wells on Rosebank are very high-producing wells, so you don't need to drill all wells up in order to hit your plateau rate. That is another kind of hedge we have in this development, which is a good place to be.
Okay, thank you. And so would you say kind of drilling the wells is a critical path or not necessarily?
No. No. Yeah, this was the other piece of that.
Thank you. Thank you very much.
We currently have no further questions, so I'd like to hand back to the management team for closing remarks.
No questions from outer space anymore. Okay, right?
Thank you very much for joining. Thank you for those joining online. I hope you got a picture of where our business is and where we're headed. Appreciate your time. I was reminded again through our refreshment, so do not forget. Thank you very much.