Hello everyone, and thank you for joining the Ithaca Energy Q1 2025 Results Investors and Analysts webcast. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. I'll now hand over to your host, Yaniv Friedman, Executive Chairman, to begin. Please go ahead, Yaniv.
Thank you, Sammy. Good morning, everyone. Thank you for joining. Q1 2025 results. Before we jump into the results, as you can see at the first slide of our presentation, you can see our Cygnus Bravo project. We're gonna show off a little bit of Cygnus today. We've announced yesterday, an acquisition that's gonna take our stake to 85% and obviously operatorship of Cygnus. So, you know, we're proud of this project and the efficiency of this project. You know, we'll talk about it later. Let's move to the next slide. Here with me today are Luciano Vasquez, our Chief Executive Officer, and Iain Lewis, our Chief Financial Officer. Next slide. We'll cover Q1 2025 highlights, strategic and operational highlights, financial overview, and we'll obviously open for questions. We can jump two slides ahead to the Q1 2025 highlights.
I think bottom line is that this is a record quarter for us, of parameters reaffirming and upgrading guidance, for acquisition announcement yesterday. If we'll go into the details, and Iain will touch on the more financial aspects of this later, record quarterly production and EBITDA performance with over 120,000, 27,000 barrels oil equivalent a day of production, supporting our full year 2025 production guidance. On safety, very proud. We have zero incidents. We're focusing on perfect day, delivering improved production efficiency, safety, and environmental performance. Luciano will speak to that later. Record quarterly, adjusted EBITDA, $653.2 million. This is really supported by reduction in OPEX per barrel. We're spending a lot of time and effort on reducing costs. Not less important, delivering strategic priorities and return to our shareholders. We're optimizing our business.
We have material activity across our portfolio to sustain and optimize production, including drilling campaigns at Captain and Cygnus. We are consolidating, so we are executing on our strategy. We have announced two acquisitions in the past two months, the JAPEX UK and the Spirit ownership in Cygnus. On a pro forma basis, we are going to add about 17,000-18,000 barrels of oil equivalent per day through these acquisitions in 2025. We are committed to delivering attractive shareholders' return, demonstrated with, you know, our third interim dividend that we paid, that was paid in April and reaffirming our dividend commitment for 2025. Next slide, please. Speaking about guidance, following completion of the JAPEX UK acquisition and the additional 46.25% stake in Cygnus, we do expect a production exit rate at the end of 2025 that could reach around 135,000 barrels per day.
If you look at the left side of the slide, so that's our 2025 guidance, that we gave in, in, at our Capital Markets Day in, end of March. If you look at the right side, what you could see is really a revised guidance to take into account the Cygnus acquisition. So 109-119 thousand barrels per day of production. We've increased by $10 million, the net OPEX range, $20 million, the net producing asset CapEx, no change into Rosebank. We are reaffirming our target dividend at $500 million. Next slide. We will talk a bit about strategic and operational highlights. And, you know, Luciano will join me in this. I think first and foremost, we're investing. And when I say investing, it's not always monetary.
It's really sometimes just attention and internal resource that we have in, in looking at efficiency improvements and targeting infrastructure-led opportunities that offer a high return and short payback, payback periods. If you're looking at, you know, our, our Q1 highlights, so, you know, perfect day, we'll, we'll talk about that. We're not gonna sing, I promise, but we're gonna talk about that and production efficiency performance. We did some rapid turnarounds of, you know, tieback opportunities, that are delivering interim barrels and program of infield drilling across multiple assets ongoing, and, and supporting our production outlook. If we'll move to the next slide, record quarter of production in, in Q1 of 2025. Average production 127.4 thousand barrels per day, confirming the enhanced operating capacity of the group cost combination, but also demonstrate the focus that we have on, levels of efficiencies, across, across our portfolio.
New wells and new RFAs too performing ahead of expectation at Captain and the J Area tieback developments. All of this, you know, production supports reaffirm that upgrade our full year 2025 guidance, also for the asset additions that we had. As you know, we are just ahead of our summer shutdown maintenance period. That gives you a really, really good picture of how we're, how we're managing production these days. I'll hand over to Luciano for the next slide to speak about the Perfect Day, days.
All right. Good morning, everybody. Thanks for being here. Two of the key elements that have allowed us to achieve this performance in Q1 are fundamentally method and focus. This is what we have behind what we call the perfect day. A perfect day is a day in which we do not register any safety or environmental event, and we make or we exceed our expected production on that day. Now, focus, because we achieve it by making the daily result visible to the entire workforce. It makes the team realize how important it is what they do and they contribute to the objective that we have in mind. Of course, it directs their minds and also their pride. Method, because of what lies behind it, that is the attention to its components. That is production efficiency.
The core is identifying improvement action, implementing them, and measuring the results. I'll talk about it a little bit later. What we do, we break down the perfect day into the asset level so everybody can take even more recognition of their achievement. As a result, we had seven out of our 10 operated assets, which not only had a perfect day, they had a perfect quarter. That means the entire period throughout the 30 days, the 90 days of the first quarter were perfect days. We can go to the next slide. Now, a perfect day can only be such if it is incident-free. Again, this is achieved with the greatest attention and continuous improvement.
We are never satisfied unless we zero all our HSSE metric, but we are clearly moving in the right direction, as you can tell. Now, what is the basis of it is lead HSSE leadership, personal responsibility, but also, and this is a theme very important, after business combination, simplification, standardization, effective system, all that can be achieved with a unified company. We can drive further improvements in HSSE performance. This quarter, we have celebrated the 22nd year LTI-free in Erskine. As you can tell, we've more than halved our total frequency in recordable incident frequency in 18 months, which is not easy to achieve. The trend is dramatically going in the right direction. Again, we can only be pleased if when we get to zero, but that is the right direction of travel.
On the emission side of things, we are also proving again the quality of the combined portfolio. We recorded the record low emission with 15.5 kilogram per BOE of CO2 emission, down from a performer of 19.1 in 2024. You keep in mind this compares to the average in the basin, which is around 25 kilogram per BOE and growing. The trend, our trend is in the opposite direction. We can go to the next slide now and talk about, in fact, the improved operational performance. How do we achieve the best production efficiency? It's not a coincidence, clearly, that HSSE performances and operational performance are all going hand in hand, because once you improve, you improve all across the board. As I said earlier, this is about a structured method, which is the tool at the basis of the improvement.
For us, this means fundamentally three things. We focus on three different areas in three different ways. One area is the unplanned downtime, where we identify the weakest links, what we call the bad actors, and look at preventive action to enhance their reliability. The second area is the planned downtime, where we look at ways to reduce the execution time of the maintenance interventions and the turnaround maintenance. The third area, which is the locked-in potential, where we look at ways to improve the performance of each single system from the reservoir to wells to facilities. The combination of this eventually brings us to have the results that we've observed in Q1 2020, Q1 this year. We are able to continue the improvement trend already observed in Q4 2024.
Of course, we have some points of excellence, like the Cygnus one we will talk about, which had a record production efficiency of 97% in Q1. Now, as a reference, again, if you look at the entire basin of the U.K., of the UKCS, it is at around 75% of production efficiency. We are moving in a different, in a different space. This reflects us in, we'll explain later, in better OpEx results, as well. I have to say that while we are doing this on our operated asset, also our partners in the non-operated asset are adopting a similar focus, different methods, but same focus to obtain a high production efficiency. Now, going into our assets, and we can go to the next slide, we have Captain. This is the largest producer among our operated ones.
We have focus in three areas here. One is the drilling campaign, which is in support of growth and in support of the EOR that has performed much better than we had planned for Q1 with a 25% increase compared to our plan. I'm talking about the enhanced oil recovery. You probably remember Capital Markets Day. We talked about two patterns that had already responded. Now we are at four patterns responding positive out of seven. We are looking at it very, very positively. During Q1, we've drilled two wells, and we've moved on, and there are new ones coming online in the quarters to come. Like all assets, also in Captain, we had a focus in production efficiency, which has been 2% higher than we had planned.
This also helped increase our production performance in Captain. In the end, I want to talk about the fact that the flotel is moving now to the site. It is expected to arrive at the end of May for the maintenance campaign, which of course is a key activity to optimize the facility, reduce the maintenance backlog, and extend the life of an asset that we consider very valuable. We move to the Cygnus asset, which is in fact the star of the moment. Production of Cygnus started in 2016 with 11 wells, which are now producing, and there are three additional wells, C12, 13, and 14, which make the current approved well campaign. The first of the two wells is being drilled in 2025, and this is spotted in Q2 2025 and expected to be on stream in the second half.
The second well is expected to be on stream at the beginning of next year. We are also starting the opportunity to further extend the infield drilling with three more wells, C15 to C17, following the current campaign. Cygnus is a modern facility with low emission. The Q1 performance in emission for Cygnus is at 5.9 kilogram per BOE. Remember the numbers I was talking about earlier. It is really a low emission field, one third of our company average, and, of course, one fifth of the basin, if you want to look at it in a wide way. Probably one of the best fields, if not the best field in the basin.
Going to our next field that I want to focus on, that is the J Area, where Q1 saw the first production of Jocelyn South in mid-March, which I remind was discovered in December last year. Very quick turnaround. Its initial rate has overcome the expectation as has the rate of Talbot, another field that was put in production in November. Both are providing us with better rates and also an extended plateau compared to the plan. This has been a big contributor to our improvement production in Q1 2025. The good results of these two fields, of course, of these two tiebacks affirm the quality and the value that can be extracted on the asset. There is a further infilling well, which is ongoing, and there is another one sanctioned, which is coming in Q1 2026.
A lot of value to be extracted yet from J Area. With that, I pass the ball back again to Yaniv.
Thank you, Luciano. So, talk a bit about strategy, and, you know, looking at our, keep saying we have a lot of optionality around our portfolio and, and how we unlock material organic growth opportunity. If we look at the Q1 highlights, and, you know, Luciano mentioned this around Jocelyn South and Talbot, but, you know, looking at kind of future projects that we have. Rosebank development progressing as planned, with 2025 campaign commenced in April, in April 2025. We're doing some refresh work on Cambo, which is nearing completion. That's another benefit of the Eni relationship of this combination that we're utilizing technical capabilities of Eni through our technical service. And concept, with a draft field development plan submitted to the NSTA during April 2025.
When we're looking at our organic portfolio, as I said, you know, optimizing, and Luciano went through kind of the key assets that we have, our main contributors to production. We're, you know, we're seeing that and, obviously looking at the future, our organic growth opportunities. If we look at what we call inorganic, but some of them are in a way organic because it's assets that we like. We're consolidating in our core UKCS market, as we've said, and I think we're demonstrating this. We're actively pursuing further value accretive opportunities, adding stakes in well-understood and liked assets across our existing portfolio. We spoke about this in our Capital Markets Day. We've announced the acquisition of JAPEX UK, increasing our stake in the high quality, well-understood Seagull asset from 35% to 50%.
We're not operators on that asset, but, you know, in Q2, that transaction we announced yesterday, the acquisition of over 46% in Cygnus field from Spirit Energy, that's increasing our operator working interest in a high margin, high quality gas field to 85%. You know, Luciano mentioned the efficiency on Cygnus, which is really outstanding. For us, increasing our position, being an operator, that's allowing us to really focus and make changes to improve efficiency, that's even more value for us, right? Now we can do this at 85%. This is the type of things that we would like to do. I think we're demonstrating that we can do that.
Part of it is also the fact that Ithaca grew through acquisitions in the past, and I believe our counterparties know that we can move quickly, we can execute opportunities, and be agile as we keep saying. To be more specific, and I've covered this in the last presentation, so I wouldn't spend too much time on this, but the JAPEX UK acquisition increased our stake in the high quality Seagull field. That adds about 4,000-4,500 barrels per day pro forma production this year. Cash generative assets, that's going to produce until the mid-2030s. We've inherited some historical tax losses here as well.
Effective date was January 1, 2024. You know, completion on track for July 1, 2025. You know, effective date 2024 means we're benefiting from, you know, the cash flows from January 1, 2024. If you remember our investment criteria metrics, you know, this ticks the box on all of them, IRR, payback period, operating cash margins, DPI, breakeven, and emissions. That is an easy one for us to digest as well. Announced yesterday, increasing the stake in Cygnus, attractive investment metrics, under $7 per BOE of 2P reserves, high margin, low emission, as Luciano mentioned, our operated Cygnus gas field, largest gas field in the UK. We're ongoing infield drilling in the area. We see further upside potential, further drilling potential. We really, really like this asset.
pro forma basis, this is going to add around 13,000 barrels of net production in 2025. Effective date here is January 2025, and we are targeting completion of this in October. Obviously, waiting for NSTA consent. Again, delivering on key investment metrics for us: IRR, short payback period. This is under two years of payback, so very attractive operating cash margins, DPI, breakeven, and emissions. I'll hand over to Iain. Next slide for the financial overview. Iain, please.
Thanks, Yaniv. Yeah, so moving to slide 21. Good morning, everyone. So calling out some of the key financial performance metrics for the quarter, so the 127,400 barrels a day production. You see the split of that, 59% oil or liquids, and 41% gas. Now, obviously, that's one of the additional benefits of the additional Cygnus ingress coming towards the end of the year, 1 October, our forecast for completion, as Yaniv's mentioned, as it adds to our gas weighting, and so brings us back more towards 50/50 in the gas oil split. You can see that the high production together with good cost management has driven a $16.5 per BOE OPEX for the quarter, and the $653 million of EBITDA as referenced before, record production and record EBITDA in the quarter.
Now, the cash flow from operations before working capital is $625 million and, relatively close to EBITDA, which in a, in a quarter where very little cash tax is paid, is a kind of reasonably good calibration. Net cash from ops after working capital is $435 million. The biggest reason for the difference there is an underlift build of $160 million through the quarter that will reverse through the year, but affecting cash flow from ops directly in the quarter. In the bottom left, there you have the loss for the period. In a really good operational quarter, but there is the deferred tax, the one-off non-cash deferred tax charge of $327 million that comes through the quarter. This was flagged in our year-end results. All our peers, obviously, are taking the same.
This is the two-year extension of the EPL from March 28 to March 2030, and comes through as a deferred tax charge uplift on the PPD balance. It is an accounting technical adjustment that was always going to come through in Q1, and that has resulted in the loss for the period. Adjusted for that, of course, we are $69 million in terms of net income for the quarter. Reflecting strong delivery and strong profits, as adjusted. The bottom two figures on this chart, liquidity, over $1.1 billion at the end of the quarter and proforma leverage 0.38 times. Of course, that is on the basis of a net debt figure, which was slightly higher than it would have been if the underlift had not been built and the cash had been brought through from that.
Low leverage, high liquidity, just underpinning our strong financial position and performance, closing out the quarter. Moving to slide 22 and our standard breakdown of EBITDA so that you can see all the details here. Really great set of numbers in terms of performance in the quarter. You can see the moving oil and gas stocks called out there, in the kind of middle row, the $161 million impact. You can see that including that, the value from production, generating the quarter of $74 per barrel, total of $852 million before operating costs, of $16.50 a barrel, $189 million in total. A kind of net back after OPEX of $57 a barrel and $653 million EBITDA. You can see the strong ability to deliver cash flow, deliver low cost and high net back through these assets.
Adding additional stakes in Seagull from July 1 and Cygnus from October 1 will just help improve all of these metrics as they are high quality, high net back assets. Moving to slide 23, a bit of a summary of our OpEx per barrel position. Our guidance at the start of the year was around $20 a barrel in the kind of low 20s, and we were aiming to bring that under $20 a barrel. The guidance up revved for the deal that we announced in Cygnus yesterday to take us to $19.7 a barrel at the midpoint on the guidance. To put that in context, you can see the Q1 number of 16.5 in this slide here. As Luciano has mentioned, there are the benefits of smooth operations and of high production efficiency.
It means that you have high production, but also smoother cost execution. I would say just in context, the strengthening of the pound versus the dollar in the quarter clearly goes in a negative direction for our cost base. We have a GBP primary cost base that's converted into dollars for reporting purposes. We have been well protected by good hedging that we did, but there is a bit of hedge gain in here and some upward pressure on costs due to the exchange rate that we have more than managed by our good execution and cost management through the quarter. Really good numbers, and showing a well-controlled cost base as we move through the year with an aim to get below 20 for the full year.
Moving on to slide 24, and a bit of an overview of our leverage position. Again, just calling out the key number on the slides that we normally show. You can see at the end of March on the first graphic that we are down at 792. As mentioned, that includes $160 million of underlift build, so clearly it could have been materially lower. We expect that really to unwind through the year. You can see just with that in the middle column, you have liquidity of $1.1 billion. Again, we look to maintain liquidity and capacity so that we can move, as Yaniv's mentioned, with agile response to opportunities in the market, with firepower for growth maintained, and we continue to work through that in the quarter.
You can see that brings us at the, at the bottom right to a leverage of 0.38 times, maintaining our financial capacity. In terms of the next slide, slide 25, just a bit of a call out on our hedge position. Clearly since the end of the quarter, there has been an adjustment in macro environment and oil price has dipped in the front end. I would call out that actually given the backwardation in the oil market before those moves and the now contango position that we are in, the actual 2026, 2027 plus oil price has not really moved much at all. The 2025 prices have, and this is why this is so important that we have this good strong hedge book for 2025, which has been called out here.
We have a strong oil hedge position with weighted average floor above $70 a barrel. That is collar floors and swaps, so it is the kind of minimum pricing for our instruments there, collars and swaps, of over $70 a barrel. You can see the profile there of strong Q2 through Q4 oil hedging, and then a really full gas book in terms of the rest of the year, with weighted average floors of about 90 pence a therm, and ceilings going up to 130. There is lots of upside opportunity, but downside protection on the gas book and on the oil book, which is all about our delivery of cash flow and protection of the short term business.
Again, continuing to show material hedge strength, underpinning our confidence as we move through the rest of the year. Okay, I'll now hand back to Yaniv to close out.
Thank you, Iain. If we all move to slide 27, just before we open for a Q&A, just again to highlight and recap what was said on this call. Record quarterly production, 127,400 barrels per day production, over $653 million adjusted EBITDA. Reflects the material scale that we have today, the diversification, the operating capacity, and the focus that we have on operations efficiency. HSSE improvements, production efficiency, you know, our perfect day. We are seeing this, and I think that's another message that we are seeing. We are seeing this trending into Q2 as well. As we said in, you know, at the Q4 results, you know, we are seeing this trend continuing of increased efficiency into Q2. Q4 cost per barrel, $16.5 BOE, demonstrates the high net back capability of our combined group.
Obviously Q1 and material activity ongoing on sustaining and optimizing production. At the same time, we're executing on our growth strategy on the U.K. consolidation, high margin, high value opportunities. This gives you a really good picture of where our business is right now, where we're headed. I've mentioned the optionality in our organic growth opportunities, and putting us in a really, really interesting position as we head into the rest of 2025. With that, I will open for questions.
Thank you, Yaniv. To ask a question, please press star, followed by one, and then tap the phone keypad. If you change your mind, please press star, followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Sasikanth Chilukuru, Morgan Stanley. Your line is open. Please go ahead.
Hi, good morning. Thanks for taking my questions. I had two, please. The first was on M&A. You've been very busy here in this space. I was just wondering if you could talk about the M&A market in the U.K., more specifically, the quantity and the quality of the assets available in the market more recently, especially in the context of the criteria that you have for acquisitions as well. Do you classify this as either a buyer's market or a seller's market? The second was on the Captain project. Good to see improved performance at the field. I was wondering if you could highlight what the current production level was, or the production level was in Q1, and remind us of your expectations of the production levels by the year-end and the peak production rate as well.
Thanks, Sasi. I'll take the first question on M&A. Look, we can look around, I guess, and since the autumn budget, we've seen kind of increased interest in the UKCS. This was the Shell Equinor announcement. Obviously, we had our combination with Eni. There were a few kind of other rumors about deals and discussions, et cetera. I think the way we, and I can't really categorize this if this is a buyer's market or a seller's market. When we look at this, we look at this from a value lens, right? For us, it's important to meet our investment metrics.
I think we have a really high quality portfolio and, you know, it's quite obvious that we're trying to high grade and add assets that will contribute and will be accretive to our portfolio. You know, the more you do, the less opportunities you have. But, you know, we still think and we still see value in the UKCS. You know, we hope that the current consultations around the future of the North Sea, fiscal scope three guidelines will, you know, will lead to sensible outcomes that would allow us to keep growing, to keep growing our business. I think we're, you know, we are doing a lot of work on the M&A side. This is how we Ithaca became what it is today.
We see, you know, we see value in that and we're trying to be very methodical in the way we analyze this. You know, I don't think there are a lot of companies that have done, you know, 11, 12 acquisitions in five years, two in, you know, two in two months. Yeah, we're active and we keep looking for accretive, accretive opportunities. Answering on the Captain production, as I said, we are pleased with the performance that we've observed in Q1.
Production overall has been, with an efficiency, which, with a performance was 15% higher than we had planned, around 21,000 BOE net, which, the particularly good performance of the EOR response, contributed significantly, together with a production efficiency, as I mentioned earlier, of 2% ahead of our plan. All in all, all the metrics are looking good for Captain. Any other questions?
Our next question comes from Kean Evan Carry from Bank of America. Your line is open. Please go ahead.
Hi, good morning everyone. Thank you very much for taking my questions. Today you've reiterated your dividend target for 30% post-tax cash from operations and also the $500 million target for the year. Now, given the current oil price environment we're in, I wonder if you could perhaps comment on how and if your thinking has changed on this front. With the two targets, could you tell us maybe about how you're thinking about the relative importance of each of them? Maybe at the end of the year, if the $500 million was slightly above that 30%, how comfortable would you be in paying that $500 million and how confident should we be in that monetary target?
Perhaps if you could comment on a related note for 2026 and beyond, could you maybe elaborate on what goes into the decision-making process on where you fall between that 15-30% range? Thank you.
Sure. Let me take that, Kean. In terms of dividends, I think there is no change in what we have said before. We have committed to 30% post-tax cash from operations as what we will distribute, and the target is $500 million. There are a number of ways to get to the $500 million as being 30% post-tax cash from operations, and clearly operational performance like we have had in Q1 will help us to get there. It is too early in the year to even consider, I think, the differences in those. In fact, $500 million is a reasonable place to peg us, especially given the hedging position. Strong hedging and strong performance on both cost management and production takes us to where we expected to be in terms of our policy for the year.
In terms of the future, again, the call out on our capital allocation framework is consistent here. 15%-30% is our range, that's always giving us opportunity to flex up and down based upon prices in the market and also our capital program and plans. I think the clearest policy out there in UKCS upstream. No more detail to be given for future years now. We'll update that at the end of 2025, but I think a pretty clear policy.
Thank you.
Again, on the M&A question, we've announced two transactions in assets that we're already in. When we look at this and when we analyze this, these are assets that we like, that we know very well. It's really reducing the risk when we're executing on these acquisitions. Maybe in this situation we see something that others can't see in those projects. We're seeing potential upsides, or hidden upsides in these projects. We like the fact that it's easy for us to analyze. It's reducing the risk, but it's also easy to digest, right? These come with very limited, if at all, organizational burden, if you wish.
You know, there's really no integration per se of these assets. It's, you know, same team, same people, understanding, you know, the assets. In assets that we like and we believe that there is upside, we would like to take more working interest. I think that plays into your question.
Thank you. That's very helpful.
Our next question comes from Verna Riding from Peel Hunt. Your line is open. Please go ahead.
Thanks. Morning guys. Question on slide six or a couple of questions. First, I was wondering if you could perhaps break down how the producing assets CapEx is allocated per asset and, of the cash tax payment, how much is EPL versus CT and SCT? Is it 100% EPL?
Sorry. Yeah. To the first one, in terms of CapEx, and we do not obviously give breakdown by asset, but, you know, we have always said that despite Rosebank being the biggest single commitment capital spend, Captain is the second. That is because we are doing drilling on the Captain field, and we are also upgrading and extending the life of lots of aspects of the field through the Flotile campaign that we are kicking off this summer with the Safe Caledonia coming in, and a number of kind of major upgrade scopes. Captain is material. When you add the polymer injection in, you are well over $150 million of investment in Captain. That is a big program.
Cygnus clearly is a drilling program on the field as is, as is Seagull continues. These are, you know, these are the kind of operated positions. Then you have the non-operated investments like the J Area, et cetera, that comes through. I think the guidance is as per the year-end, but the adjustments for Cygnus, so a consistent story of kind of capital investment or core assets. In terms of the tax question, just restate that one, Verna, so I make sure I have that one right.
Yeah. Just wanting to know of the combined cash tax payments you're expecting to make, how much of it is EPL versus CT and SCT? Is it pretty much all EPL or?
Yeah. As per our kind of track record, it is very largely EPL. What was paid in Q1 was $20 million-odd, of which $16 million was EPL and another $6 million or so CT and SCT. There will be some CT to pay as well, and clearly the deals move things around as well in terms of assets in the group. Yeah, it must be 90% EPL on the cash tax forecast. Yeah.
Mm-hmm. All right. Great. Thanks a lot.
Our next question comes from Chris Wheaton from Stifel. Your line is open. Please go ahead.
Thank you. Good morning everyone. Thank you very much for taking my question. Well done on the production uptime in Q1. I think huge hat on the back to Odin and his Perfect Day plan because it's clearly paying dividends. My first question's around that. Is it possible for you to give some more detail on the particular assets that bridge from the 116,000 a day you did in Q4 to the 127,000 a day in Q1? Feels like most of that upside was from Talbot and Jocelyn, but that also means the decline was offset by better performance in the base. I'm kind of interested, is that characterization accurate? Then, a couple of questions for Iain, if I may. Firstly, can you give us numbers on cash tax and working capital outflow to bridge from that operating cash flow to net cash flow?
Secondly, in your commentary, you talked about underlying OPEX inflation. I'm interested in what you think that OPEX inflation is because clearly the windfall tax is having an impact on activity. It's driving up costs. What kind of cost inflation are you starting to see in the North Sea? Thank you.
Yeah. I'll maybe start with the first thing. Let me work back to the production to Luciano. In terms of inflation, I guess we're not seeing, we're not really seeing cost inflation in our base, outside of FX impact, which is, you know, it's relatively minor, but you move from the high 120s to 133, 134, and we're well hedged on FX actually, but it still has some impact in terms of the flow through of the numbers. I think we're continuing to see our very active cost management and supply chain management, working with our vendors and long-term suppliers in terms of arrangements, mean that we've got a very stable cost base.
In fact, with the E&I and Neptune assets coming in, we've been looking at all of our contracts again as part of that integration process as normal, and again, just seeing the day-by-day small synergistic aspects of building a wider portfolio with the same supplier. I think in terms of OpEx, it is primarily a bit of FX noise rather than basin-wide inflation, I think, coming in. We are seeing fewer suppliers in the basin able to offer services. Still competition, but not significant inflation in cost. In terms of the operating cash flow bridge, few people get so interested in the bridge details, Chris, but I know you do. In the cash.
Not at all.
No, not at all. I think on page 16 of our financial report, if you dig around in there, you'll see that, you know, it's $21.7 million of cash tax paid in the quarter. As I said, $60 million of that was EPL. You can see the inventory movement as well of like $140 million, negative in the working capital, with some kind of other adjustments minor in terms of receivables and payables. I think it's pretty well bridged in note 16 to, or on page 16 of the financial statements, but happy to expand more as required either online or offline.
Back on the question for, on the performances, in reality, we had very good, pretty good performances distributed across several fields. I mean, you do not make that in from one field only. As much as we are protected because there are several fields and so, the downsides are typically distributed, but also the upside have to be pretty distributed. Going to the specifics, both our operated major fields, Captain, as I spoke earlier, and Cygnus with its pretty high efficiency were a bigger contributor, but also the J Area, as I mentioned earlier, with increased performance or enhanced performance of Talbot and Jocelyn South. Elgin Franklin also had a pretty good performance with an optimized management of rig movements that had been planned and then eventually were reduced in terms of the day, of the downtime.
Seagull as well had good performance. Most fields had better performances and particularly the big ones had better performances. That is how we made it, how we made the number in the first quarter.
Brilliant. Thank you very much and well done.
As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Mark Wilson from Jefferies. Your line is open. Please go ahead.
Okay. Thank you. Good morning, gentlemen. Obviously we're seeing Ithaca continuing with its strategy of consolidation in the U.K. North Sea with the deals. Arguably, you seem to be something of an outlier in that regard. That would probably be my first question. Do you agree with that statement?
Mm-hmm.
What sort of competition have you been seeing for some of these recent deals you've done? The next point would be, I think really a big catalyst would be to see farm-ins to some of the assets that you have. Obviously, notably Cambo would be one of those. If we could speak to that secondly, is there a potential timeline that anyone should think of for that, or do we have to have clarity on the environmental and the tax situation longer term before anything like that could happen? Thank you.
Thanks, Mark. I'll take these. In terms of growth in the UKCS, if we're an outlier, I think it's a, you know, sometimes a reality is, I guess is the best way to look at things, right? I think we're being active. You know, in the last year we've completed the E&I combination and two other, albeit smaller, but not insignificant, deals. You know, we're active. I think, and I've said this publicly in other places, I believe that, and when you look at the UKCS, and, you know, the cost base you operate in, consolidation is important, right? Scale, the ability to get to scale, gives you a lot of advantages.
You are seeing this, you know, through our numbers, right? We have a great team and we are focused and we know what we are doing, but, you know, obviously the scale helps. It helps driving costs down. It helps in kind of diversification. We see consolidation as something that is really important. In terms of competition, you know, we know there were other players that were looking at the assets that we were looking at. I cannot tell you that we see this as competition per se. As I said, we are focused on meeting our investment criteria. We are very rigorous.
When we analyze this, and I think counterparties or sellers, because of, you know, the track record Ithaca has, see us as a serious counterparty that can move quickly, can take decisions quickly, be agile. We have our balance sheet that allows us to move quickly in opportunities, as we've mentioned earlier. I think from that perspective, I guess we're more active than others. Yes, on farming opportunities, specifically you mentioned Cambo. Again, we've said we would not do Cambo at 100%. You know, where Ithaca is right now, we would look for farming partners.
We do think that, you know, with the overall environment towards the North Sea potentially changing and some sensible decisions from the government, hopefully on, you know, on fiscal and future of the North Sea, I believe we'll have a few candidates that, you know, will look at this as part of their West of Shetland strategy. We do need to see where, you know, the post-EPL environment lands, and how it looks, before taking a final investment decision, that's for sure. You know, we would like to see farming partners that could support obviously the project from the financial perspective, but, you know, also be a technical sanity check for us.
Yeah, as we've said, you know, we would like to bring in partners for that. Thank you, very clear. I'll hand it over.
Thanks.
We currently have no further questions. I would like to hand back to Yaniv Friedman for some closing remarks.
Thank you very much for joining, and for the questions. We appreciate that. We'll see you next quarter. Thank you very much.
This concludes today's call. Thank you very much for joining. You may now disconnect your lines.