Hello, and welcome to the Ithaca Energy H1 Results 2023 Analyst and Investor Call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Gilad Myerson, Executive Chairman. The floor is yours. Please go ahead.
Thank you very much. Good morning, everyone. I'm gonna start with a high-level overview of our results. Then I'll hand over to Alan and Ian. We're very pleased to share our results today. We had a very strong quarter and demonstrated strong delivery across our buy, build, and boost strategy, as well as our capital allocation policy in the first half of the year. You'll see it in the numbers. I'll start with the financial highlights. First of all, we're very excited to announce today the second tranche of our 2023 dividend, distributing another GBP 133 million to shareholders, which takes our total year-to-date dividend to GBP 266 million, in line with our commitment to shareholders at IPO.
Our adjusted EBITDA, as you can see, is GBP 980 million, which is higher than last year, with adjusted net income of GBP 253 million. This enhanced EBITDA and high EBITDA has allowed us to continue to deleverage, again, according to our strategy, and our, our current leverage position is 0.35x, which is significantly down from where it was last quarter at end of the year, with a reported net debt of just under GBP 700 million. We also have quite significant liquidity, in terms of our balance sheet, with almost GBP 800 million, which gives us some, some flexibility. On the operational side, we had a very strong H1 production of 76,000 barrels a day. Q2 was slightly higher than Q1.
What was very important about Q2 was to demonstrate high production efficiency, which also rose from Q1 to Q2. In terms of Captain EOR Phase 2, the project is meeting most of its milestones, for the 7 wells have been drilled. The top side is almost done. We continue to move ahead. We're also very happy to announce the exploration drilling success at K 2. It's the second exploration drilling that we've had over the last few years. We had Fotla, you may recall, in 2021, and now K 2, and we in the process of the sidetrack appraisal. At the minute, we'll hopefully be able to announce the barrels over the next few weeks. In terms of strategic highlights, we're getting a lot of questions about Rosebank.
We are very keen to develop Rosebank. We find it a very good field, and we're in the process of working together with the operator on the development plans and financing arrangements in order to move towards FID. In terms of Fotla, you may have seen that we acquired another 40% of Fotla. One of the partners in the field decided to exit, and we're very happy to take their stake in Fotla. It gives us more control over the FID work that's that's ongoing. Finally, on Cambo, as you may be aware, Shell have 30%. They, they share. Our understanding is that's progressing well, and hopefully, that sale process will end soon, which will allow us to continue the project towards FID.
Yes, overall, a strong set of results and strong progress along our buy, build strategy. Alan?
Great. Thank you, Gilad. Well, starting on slide five with safety and environmental performance. We continue to focus on strengthening our process safety defenses and reducing our major accident hazard risk. We had 1 Tier 1 process safety event in the quarter, which was not associated with the production process. On the Captain FPSO, there was a loss of containment of marine gas oil after a hose supplying power generator failed. There were no serious incidents in the quarter. We're also continuing to progress emissions reductions projects, and we commenced front-end engineering design on the Captain Electrification project in the quarter. Work to date has been encouraging from a technical perspective. However, the greatest challenge for this project remains access to a suitable grid connection in a timely manner, which we're actively working.
Moving on to page six, our production, as Gilad said, for the second quarter was strong, 76,000 barrels of oil equivalent per day, which is a slight increase on the first quarter. Production efficiency at our operated assets has been good, with FPF-1 running at 99.7% for the quarter and Captain achieving its longest-ever production run without a trip. We do expect in the third quarter, lower volumes as a result of planned maintenance across the assets. Maintenance outages are expected to normalize in the fourth quarter. We'll see some impact of natural field decline impact in fourth quarter volumes as, as we get towards the end of the year. We remain on track to deliver within our guidance range of 68,000-74,000 barrels of oil equivalent per day for the full year.
Turning to page seven, this slide provides an update on the Captain EOR-2 project, which is making good progress. As you can see from the pictures, construction is continuing, with installation of piping cassettes completed in the quarter. Drilling of the injection wells is ongoing, that will continue through 2024. We have a shutdown at Captain, which will be completed in September, to undertake modifications to process equipment and install vital tie-ins to support the project. Commissioning is scheduled for the first half of 2024, with first injection planned in summer next year. Moving on to page 8, we remain confident in the application of the pioneering polymer flood technology at Captain. I mean, you can see performance of the first phase of polymer recovery on this slide relative to expectations....
The top chart on the page is showing the actual production associated with polymer recovery relative to estimates from the field development plan. The key point is that we've produced over 11 million barrels of oil equivalent so far from polymer injection, and we continue to develop the polymer formulation to improve efficiency. We're finalizing a 5th generation of the polymer technology, which is due for field scale implementation later this year. We're already working on a 6th generation in the lab, so we're continuously improving the polymer formulation to make the recovery process more efficient, and that has been the reason for some of the benefit that you're seeing in the charts presented on this slide.
At the same time as optimizing the first phase, we're updating our subsurface models for Captain, and we're incorporating the latest view of production and also new reprocessed seismic data that we have into our models. The EOR project is that overall recovery remains in line with previous expectations. However, there is the potential that oil production response to polymer could be slower than previously anticipated, with a delay to peak production. We're still working through the modeling, and we'll, we'll update as that work matures. Moving on to slide 9, a quick summary on our growth projects. On Rosebank, as Gilad said, we're continuing to work with our partner and the regulator to finalize development plans while evaluating financing arrangements. On Cambo, we announced in the, the quarter at the same-day marketing agreement with Shell.
As we have them on that. Our investment in exploration is very targeted, and it's focused on low-risk project, prospects adjacent to existing infrastructure. As Gilad had mentioned, we made the Fotla discovery in 2021, which is close to the Alba Britannia area, and we continue to evaluate options for the field. We were pleased to announce the acquisition of the remaining 40%. That gives us full control of the development plan and timeline. We acquired the K2 prospect through the Summit acquisition last year, and it's another example of a low-risk prospect, supported by seismic amplitudes, close to existing infrastructure. The primary wellbore discovered hydrocarbons, and we've commenced back in order to refine hydrocarbon in place estimates and support development planning.
Our focus really is on high-grading investment opportunities across the portfolio, preserving optionality to progress developments depending on market conditions. I'll hand over now to Ian, who's going to provide a financial update.
Thanks, Alan. Can we move to slide 11, please? Good morning, everyone. This slide summarizes the performance in H1 2023, which, as we've summarized, shows consistent and strong production and cash flow delivery. Production at nearly 76,000 barrels a day, delivering EBITDAX of just under GBP 800 million, and adjusted net income of over GBP 250 million. Strong net cash flow from operations of nearly GBP 700 million, which has allowed us to reduce our net debt position, GBP 698 million at the end of June, giving us significant liquidity available at the end of the period, and a low net debt to EBITDAX ratio of 0.35 times.
Q2 is always a high cash-generating quarter, really glad to see the production and the cost control that has delivered those results, that's enabled us to announce the second interim dividend of GBP 133, taking our total dividends to the year of GBP 266 million, able to reconfirm our commitment to deliver a GBP 400 million dividend for the 2023 year. A strong first half performance coming through in all of the metrics. If we move to slide 12, this shows us the comparison of the half year of 2023 with the full year of 2022, really in a time period where there has been significant volatility in commodity prices, and significant inflationary pressures on operating costs.
What this slide shows is the consistent delivery of our business and of our financial model, such that we have growing production. We have a very robust post-hedging commodity price delivery, relatively flat operating expenditure per barrel, and relatively flat adjusted EBITDAX per barrel. High and strong EBITDAX performance being driven by those combination of factors. The hedging results, particularly, you'll notice, delivered significant value. Gas, for example, in H1 2023, delivered $125 a barrel equivalent after hedging, and $82 a barrel before hedging. A significant uplift based upon our hedge book. Really glad to see the operating cost control coming through as well. We've spent a lot of time and effort ensuring that we are efficient.
We had an internal cost control program running through Q2 and running into Q3, just to ensure the efficiency of the business, and we're seeing that coming through in the numbers. Strong delivery and robust progression from 2022. On to slide 13. We give more details here of, of, of EBITDAX to help everyone understand just how the evolution of EBITDAX through the period has developed. Calling out, particularly a couple of items here. You'll see the hedge book there that delivered $13 a barrel in H1 2023. So $172 million, and nearly $100 million of that was in, was in 2Q.
You'll see that means outturn delivery of EBITDAX for the year of GBP 980 million, for the half year rather of GBP 980 million, comparing the GBP 907 million for the half year 2022. Delivering on our commitment around production and delivering on bottom line EBITDAX due to the hedge book and the control, resulting in price delivery. Moving on to the next slide, slide 14, is a summary of the financial framework and just showing progression through the historic periods of how we've protected the business by reducing the net debt position. You'll see at the end of June, we had a GBP 65 million bond position, and the RBL balance offset by cash was GBP 74 million.
$699 at the end of the half year. That shows in the next set of bar charts, where this fits with our liquidity position. We were glad to complete the RBL redetermination process. It was a semi-annual process. We did that during Q2. That was the first time that EPL was fully included in our calculations, and a relatively modest reduction in our RBL capacity. As we close the half year, you can see that we have significant liquidity available of $791. We also, post-period end, concluded a facility agreement with BP on a $100 million loan facility that runs through to 2028.
This is just part of our ongoing capital structure management and building optionality as we look forward to investments and to deployment of capital in the coming years. We close the half year rather, with 0.35 times net debt to EBITDAX and significant liquidity, inclusive of the GBP 100 million BP facility. It's nearly at GBP 900 million of available liquidity. Moving on to slide 15, this is just really calling out a bit of detail around our hedge book and hedge performance. It is core to our delivery of consistent cash flows in the periods to high-grade our hedge book, and we do that by hedging at the peaks in the market. You can see this in our slides 15.
What we look to do is to be 75% protected at 12 months ahead, and 50% 2 years ahead, et cetera. Hedging has been complex in the market for a number of reasons in the past year. What you see in the right-hand side of this chart is that we have taken advantage of peaks in the market to, to hedge. For example, in the oil line in blue, you'll see that we essentially didn't hedge any oil during the period where oil was in the $70 range, between May and late June. We hedged in April when it was in the $80s, and we've been hedging in the past few weeks as oil has, has been higher.
Likewise, with gas, you'll see that although gas has been on a decline, for, for a number of reasons, we are hedging at the peaks. In fact, this was called out as at the, early, early August or mid-August, but we actually did some more hedging yesterday on gas when gas kicked up again. It's all about delivery, it's all about value of, of EBITDAX being protected through our hedge book, and we continue to manage that very carefully. Slide 16 shows the position at, at the 16th of August. Again, just reinforcing the, the quality and the depth of the, of the hedge book. We have a significant color, proportion to our, our hedge book, which sets a floor, and these are high-level, high pricing floors.
You'll see that the total weighted average oil price floor for the next periods rises through to the mid to high $70s in 2024, but giving us ceilings into the $80s, so giving us some upside participation in the future. And clearly in gas, likewise, we have a hedge book in Q3 2023 that's extremely high and good quality hedges out through 2024. Moving on to slide 18, and this is just around the ability to reconfirm guidance on production, given the delivery in H1. So the guidance for 2023 remains in the 68,000-74,000 barrel a day range. I'm very glad to be able to reduce our net OpEx guidance range so that it's come down, the top end being reduced.
We're now ranging from GBP 560-610 million, with strong operational cost control through the closing part of the year. The final guidance range is on net producing asset CapEx, and here we're seeing the impact of the EPL, where we are reducing investment selectively, and that has come through in the numbers here, where we're now looking to close out the year on a lower net producing asset CapEx basis, now ranging GBP 390-435 million for producing assets in the year. To speak more about EPL and the impact on investment, the next slide, I'll hand back to Alan, slide 19.
Great. Thank you, Ian. As we've said previously, the Energy Profits Levy has created a number of challenges for the industry and in particular, E&Ps such as ourselves. Financing has become more challenging since the introduction of EPL. Competition for capital is high, particularly where joint venturers have global portfolios. Cash flows for reinvestment are reduced, fiscal uncertainty remains. We welcome the government's efforts to support the industry through the Energy Security Investment Mechanism, which was announced in June. As a reminder, it was announced that the EPL, it will fall away if commodity prices return to historically normal levels for a sustained period, which is deemed to be oil prices below $71 a barrel and gas prices below 50 pence, 54 pence per therm for two consecutive quarters.
When taking into account inflation and structural changes in the market, we believe that commodity prices are substantively now in line with normal levels. Unfortunately, however, the EPL, ESIM, we remain well above the ESIM trigger price, and the EPL remains. The fact that oil and gas prices are linked in the trigger mechanism and the lack of allowance for seasonality or structural changes in the gas market is a concern rendering the ESIM unlikely, in our view, to achieve its stated intent. Moving on to slide 20, which outlines the impact of the Energy Profits Levy. We've seen a number of operators cancel projects and pull back on investments as a result of EPL, and Ithaca are not immune to that, and we expect to see an impact in the near term.
As a direct result of EPL-related investment decisions, our 2024 production is now expected to be lower than 2023 levels. Specifically, we're no longer planning to drill the Harrier infill well, which is 100% Ithaca equity in 2024, resulting in a reduction in production of over 5,000 barrels of oil equivalent per day. In addition, the Montrose infill project's been delayed by the operator, and an infill well at Elgin-Franklin was canceled, and this is on top of the well at Shaw, which was not completed earlier in the year. Collectively, this represents $several hundred million of lower investment than would otherwise have been the case. We remain committed to developing our high-value portfolio, but the pace of investment has slowed commensurate with cash flow available in the business.
Their primary goal is to deliver shareholder value, which we'll achieve through diligent capital allocation across our buy, build, and boost strategy. I'll now hand back to Gilad for closing remarks.
Thanks, Alan. As you've seen, we had very strong H1 results, $1 billion of adjusted EBITDA. We have over $800 million of liquidity at the end of June 2023. We have delivered against our capital allocation policy. We are, we are distributing another $133 million, which brings our year-to-date dividend, as mentioned before, to $266 million, with line of sight towards the $400 million that we committed. Unfortunately, the Energy Profits Levy is having quite a significant impact on the industry in general and on Ithaca. Specifically, it is slowing our pace of growth. We want to make sure that we are preserving optionality.
We want to make sure that we are investing capital in accordance with, with our overall strategy, and we feel very comfortable with our, with our development barrels, with the large projects. We just need to make sure that we do those investments in a, in a sensible pace. We are continuing to review the M&A landscape due to the market dislocation. We see other companies exiting the market. We believe the consolidation of the UK North Sea will continue, and we're in prime position to continue on that journey, as well as looking for opportunities outside of the UK as well. Overall, a very good quarter, and we feel a very good set of results and happy to open up to, to questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. Our first question comes from Sasikanth Chilukuru with Morgan Stanley. Your line is open.
Hi, good morning, all. Thanks for taking my questions. I had three, please. The first was related to the impact of the UK EPL on the investment opportunities for the company. You highlighted how the EPL has resulted in the deferral or cancellation of several opportunities in 2023 and 2024. I was just wondering if you could provide more details on what changes you would need to see from the UK Government Fiscal Forum, either to, either to arrest or perhaps reverse further deferrals or cancellations. If you could provide more details on that, that would be helpful. The second was related to your comment on acquisitions. I was...
Again, here, I was wondering if you could provide more details on this, maybe in terms of the deal size, what should we expect here? The geographical areas you've talked about, UK and outside UK as well, and any comments here or details would be helpful. Finally, the third one was on the Captain EOR Phase II project. You have previously indicated that the EOR Phase II project is expected to double the net production of the Captain field to 40,000 barrels per day in 2025. I was just wondering, from these initial indications of the updated model, what this number and year could be? Thanks.
Thanks, Sasikanth. I'll answer the first one. I'll hand over to Alan for Captain EOR. On EPL, what's important to understand is that there are no windfall profits in the industry at the moment because the commodity prices have come down quite significantly. We went through a, a, a situation over the last few months where the gas prices were significantly lower before than they were before EPL was brought into, to, into play. Therefore, what we need to understand from the government what the long-term fiscal regime is going to be. It's important to have stable, stable policies in order to make long-term decisions.
If you take the, if you look at Cambo and Rosebank, as well as some of the smaller projects, these are 10-20-year projects. The EPL has changed 3 times over the last year. We need to make sure that any, any policy is robust and is stable and takes into consideration the changes in commodity prices. We're working very constructively with the government. The government understands this. If you look at their consultation that was sent to the industry, they call out the need for stability. We feel that they are planning to come up with the changes that will support investment.
In the meantime, until that happens, we just need to feel it's, it's prudent to slow down our, our investment program in order to make sure we understand in full the, the plans of the UK government. Your second question is on M&A. In terms of the current acquisitions that we're looking at, they are smaller bolt-on acquisitions. We don't have any large acquisitions that, that we're currently looking at. In terms of geographical areas, our primary focus is the UK. That's where we have most of our synergies, our operating synergies, financial synergies, tax synergies. We also have relationships with the relevant parties, partners, as well as the regulators, and therefore, we feel very comfortable doing deals in the UK, and, and, and thus, most of our focus is in the UK.
We are looking to opportunities in other parts of the North Sea, in Norway, in Netherlands. We have, we have looked into opportunities in the U.S. as well. Before EPL, we were solely focused on the UK, but now with the current fiscal regime, we are looking at opportunities abroad, as are most other, other companies. On Captain, you will hand over to Alan.
Yeah, great. Thank you, Gilad. Thank you for your question, Sassy. Yeah, I'll just answer this one, and then I can let you jump back in. Real quick on Captain, as I said, continuing to see good performance from EOR 1 and 11 million barrels recovered, and that gives us good encouragement on the second phase of EOR. As I mentioned, initial indications potentially slower. Still estimating, you know, similar levels of peak production, but sort of nearer the kind of later in 2026-2027 than perhaps 2025.
Those are the early indications, but it's still early days, really, in terms of doing the work and continuing to assess what that looks like, so we'll, we'll provide updates as we, as we've got them on that.
Great. Thank you very much.
Our next question comes from Reuben Dewar with Jefferies. Your line is open.
Good morning, gentlemen, and thank you very much for taking my question. I have-- I also have three. For the drilling at Greater Stella Area, MonArb, and Elgin-Franklin, which have been canceled and/or delayed, do you have a CapEx? Do you have a number for the CapEx reduction impact this has for 2024? That's my first question. Secondly, you mentioned the pace of the pre-FID work has, has slowed. I was wondering if you guys still foresee Rosebank FID by the end of this year. My final question is, do you have any comments on the 2024 dividend?
I think I recall that the ambition was once to pay GBP 420 million, and I'm acknowledging that that was very much an ambition, but has this been impacted in light of the 2024 production that you've communicated today? Thank you.
Sure. Great. Thanks, Reuben. Well, let me take this second one on Rosebank, and then I'll ask Ian to jump in on the CapEx and the dividend question. You know, just to, to, to remind everyone, Rosebank, you know, it's a really strong project, some GBP 30 billion in tax collection investments over the life of the field, and estimate that 1,600 jobs will be created at peak. A really important project for the country, important project for us as Ithaca and, you know, important that we're just very thoughtful and, and in our completing the process or decision, because it's a big commitment for us as a company.
Really just restating what Equinor had said as the operator, that, you know, waiting on a final conclusion on, on a few things and final approval from the regulator. We're hopeful that that will move forward and not too far in the future, but, just, just kind of working through that just now. Ian, on drilling CapEx?
Yeah, sure. In terms of, in terms of CapEx, obviously, you'll see the reduction that's come through in 2023 already. That's, you know, there's long leads associated with these projects that are very significant, and that's part of the reason why 2023 CapEx is reduced. In terms of 2024 guidance, obviously, we're not in a place to give guidance just now, Reuben, but I think I would point out that, that whilst the appetite for investment within Ithaca is strong, but EPL is holding that back. That's also happening with our partners. You know, a significant amount of our of our production and a reasonable proportion of our development spend is in partner-operated assets, and they're all going through their plans for 2024.
At the moment, we're seeing plans for 2024 come through in draft, and that's changing the capital program for next year. It's a moving picture at the moment. I think the key point is that we have the capacity to invest and desire to invest, but everything has to be high-graded, and the EPL has a very distorting effect on different companies in terms of their capital appetite and capacity. Not, not everyone's in the same liquidity position that, that we're in. Not able to give guidance yet for 2024, but we'll come back in due course on that in terms of capital, working that hard just now. In the dividend, the key message is, is the consistent policy that we have on, on dividends.
A relatively unique UK policy, I think, in terms of oil and gas, in terms of clarity for our investors around the 15%-30% post-tax cash from operations. Obviously, that is impacted by, by production levels, so as we come out in due course with production ranges, et cetera, that will become clear. The key focus here is on dividend delivery and consistency of protecting the, the dividend delivery, and we'll continue to, to do that.
Okay. Thank you very much, guys. Appreciate it.
We now turn to James Carmichael with Berenberg. Your line is open.
Hi. Morning, guys. Just a couple from me. I guess, I think you quantified the potential production impact from the MonArb and Phil wells. Just wondering, if you, like, I'm cognizant of the fact it's a bit too early to go for next year, but just if there's anything you can say on sort of, the impact from, the other deferred projects you mentioned, Elgin-Franklin and Montrose, and how that might sort of be offset within the portfolio for next year. Just trying to wiggle out, I guess, a bit more on the, the potential production impact for next year. Then, just wondering about the BP facilities, so the $100 million.
What's, what, what's the sort of the, the use of proceeds for, for that, for want of a better expression, whether, whether that's secured on, on any sort of underlying production or any assets. Then just taking a step back, thinking about sort of, your view, I guess, of the gas market in, in the second half. Obviously, you know, Woodside strikes might have an impact, in the short term and, and a few tail risks heading into the winter. Just, just to get a sense of, of how you see that, in the second half would be helpful. Thanks.
Sure. Can I just confirm the second question, I think, was around the BP finance, is that correct? Just to confirm that second question.
Yes. Yeah, just on the BP facility, just to get a bit, bit more understanding of whether that's secured against anything or what, what it's actually for. You know, is, is it just liquidity management or, or is there something specific you're looking for?
Yeah.
Thanks.
Sure. Sure. No, absolutely. So, yeah, I mean, let me, let me walk through those. So from a production perspective, as you said, we'll, we'll come back obviously with guidance for 2024 in due course, once the capital plans and the, and the, you know, the shutdown plans, et cetera, all worked through with our partners and with our own, our own plan. That's, that's in focus right, right now. I think the key update we've, we've given is that the, the GSA hub, with the cancellation of the development activity, is gonna be, you know, over 5,000 barrels a day, less than, than was previously expected in 2024. And we've said that 2024 production, we expect now to be lower than 2023.
I guess those are the two guiding lines just now, and we continue to work the plans and the high grade of value through the planning process here. In terms of the BP loan, this was, I guess, standard piece of business. We have offtake agreements at good commercial terms with BP for a large amount of our production. They were coming to a time of renewal. It is fairly common at the moment to have the opportunity of financing unsecured, which this is. That came together with the offtake agreement. It is attractive commercial rate.
Not publishing that right now, but happy with how it fits into our capital structure, and it's a helpful capital structure element as we look to the 2026 amortization profile of our RBL and our bonds, and look to build the capital structure beyond 2026. This is a loan that goes out 2028. It's a modest, modest amount, obviously $100 million, but it's a very useful part and a kind of ongoing part of our capital management, and we'll work into kind of refinancing plans in the next year or so.
In terms of the gas market, I mean, I'm going to have an initial reference point maybe passed to Gilad, but the working that very hard, very, closely monitoring the gas market, both in the short term and in the medium term. The return of a kind of cyclical gas market, we're seeing, obviously, and that means particularly, we're focused on protecting summer positions, which we have done and continue to do. We did more of that yesterday because summer 2024 prices increased.
We see it as clearly being a, a volatile market in the medium term, with, with, with peaks and troughs, and, we're making sure that our production, or sorry, our hedge book is, is focused on protecting us from the downside, but making sure we have the opportunity to partake in the upside.
Yeah, thanks. I'll only add to that, that yeah, this volatility is driven by a lot of events that are happening. I think, coming to the winter, the marginal supply in the U.K. is still going to be LNG, during the winter, the three main hubs are U.S., Australia, and Qatar. Any disruption in either one of those jurisdictions means that the prices over here will rally. When it comes to hedging, we want to make sure that we can participate in an upside, should it happen. Obviously, the, the, the, the storage is full. Reports are already 90% in Europe. There may be some short, short-term reduction in gas prices if the Wood strikes don't go ahead.
That's how we're using our hedge book to make sure that we can capture some of the higher prices. I think everyone is waiting to see what's going to happen in terms of the temperature this winter. If it's a cold winter, we're expecting a very high, gas price market, with impact on Ithaca. If not, then, I think the current forward curve is, is a good indication.
Very clear. Thanks, everyone.
As a reminder, if you'd like to ask any further questions, please press star one on your telephone keypad now. We now turn to Daniel Slater with Zeus Capital. Your line is open.
Good morning. I was just wondering the last thing about how you're finding-
Dan, we're struggling to hear you. I don't know if you can maybe get a bit closer to the mic there.
Oh, sorry. Is that better?
Yeah, that's better. Thanks.
Oh, perfect. Apologies. Thanks for taking my question. I was just wondering if you could tell us a little bit more about how you're finding the debt markets. Obviously, you've done your redetermination, which is very successful. Just thinking perhaps about new capacity, and particularly maybe for when you're thinking about the funding for Rosebank.
In the context as well as there have been reports of this meeting the government wants to have with several of the top banks, some of which apparently are sort of not sending their, their top people to it, and what the banks' attitudes are increasingly being, whether the EPL is really feeding into that, and therefore, whether a reduction of the EPL would significantly change their attitudes or whether perhaps it's their wider ESG concerns that are impacting matters, and therefore, there's less of an opportunity for sort of change and increased capacity. Any sort of comments you can make around your sort of experience there would be very helpful. Thanks.
Sure. Yes, clearly, the debt market, for, for oil and gas is, is moving. I think, the government recognizes that the, the EPL has had a negative impact upon that, and I think you'll see from our numbers that we're in a relatively favored position regarding our, our, our capacity. And that's to do with the quality of our assets and the value of the borrowing base of our assets. That puts us in a relatively unique position. I think likewise, in terms of banks, so we have a high-quality banking syndicate in the RBL, and, and, and supportive, which is very useful. Clearly, over the next couple of years, we will move to a refinancing with our 2026 current profiles.
We're keeping a close eye on the bond markets, which are open at the moment, and we're seeing good activity, particularly in the US, on the bond market, but at rates that are above our current position and above we were able to access finance at the moment. You know, the GBP 100 million that came from BP is part of a finessing of our long-term capital position, and as we FID projects and as we seek to ensure we have debt that's linked to those project timelines, we will perform the refinancing that we think is most appropriate at the time.
I think a fluid market with for a company the likes of Ithaca, with lots of options, but clearly a backdrop for oil and gas, which is less supportive than it has been, and, and something we'd like to see change with the EPL, and particularly the trigger mechanism being adjusted.
Okay, I understood that. It's really helpful. Thank you very much.
Thanks, Dan.
Our final question comes from Chris Wheaton with Stifel. Your line is open.
Thank you very much indeed. Three questions, please, for me. First to Gilad. You've talked about the need for consolidation in the sector, which I would completely agree with. I'm interested in your views on what's stopping it. It was interesting to read, for example, the Apache Chief Executive's 2Q comments about not selling out to the North Sea post EPL, but harvesting it, talking about slashing CapEx by 50%, but then just harvesting the free cash flows. I'm interested in, you know, why you think this, the, the asset sales haven't started yet. First one for Alan, on CapEx on Marigold.
I'm interested in where you think that your partners are with that project, because Marigold, I would have thought, is one of those projects that looks quite at risk post the EPL, and, you know, clearly that's a significant contingent asset that, you know, we're hoping to have in production in the next 3-4 years. Last question for Ian, probably, in relation to the Harrier, the GSA impairment. I know your decom estimates have gone up by about GBP 100 million in the first half of the year. Is that related to pulling forward of the GSA decommissioning, given lower production is going to presumably lead to earlier cessation of production? That's it for me. Thank you.
Thanks, Chris. I'll, I'll answer on the consolidation. I don't think it's stopping. I think it's just slowing down. I think the reason that it's slowing down is because there's so much volatility. People don't know how to price an asset with the huge volatility in gas prices specifically, as well as the significant changes in EPL. It's very hard to peg a number to the value of a company. We're in many discussions where the whole value from sellers is actually unclear to themselves, and therefore, it's, it, it's just a longer process than, than it usually is. Another challenge is decommissioning obligations. There have been some defaults in decommissioning obligations over the last few years, which I think is a big concern for some of the sellers.
They're looking toward the larger companies. There are quite a few smaller companies in these processes, there are some concerns about retention of decommissioning and committing to decommissioning, which I think is also raising a few questions. Obviously, I can't comment on any of the majors or other independents, in particular, thinking of leaving, those are the two main reasons why processes are a lot slower than they have been in the past. What we are hearing from executives across the industry is that quite a few of them have decided to withdraw from the UK, we do believe this trend will continue, or will just take a little bit longer.
Right. Great. Then, yeah, the second question, Chris, was around Marigold, and I think just to kind of characterize it, similar to other projects in terms of, you know, continuing with the technical work and continuing on with the unitization work with our partner there. Yeah, really, I think the important thing for us is just looking at all the projects in the portfolio. We've got some really good options. You know, we announced the K2 discovery, we're continuing to add to the strong options across the portfolio and just make sure that we're allocating capital to the highest return projects.
That's our focus really is, as we continue to keep our options open and, and, and move projects forward while being very thoughtful about our allocation of capital. The last one, Ian, was GSA impairment and decom.
Yeah. I think that in terms of GSA, obviously, the decision not to invest in some of the well activity there is disappointing, but we feel it's the right thing in terms of allocation of capital. At the moment, there's no substantial change in the decommissioning timing for GSA. Clearly, we'll work through that as part of the planning for the year and how we manage costs and well P&A planning, et cetera. That's down the line substantively and certainly isn't impacting the numbers in Q2, although I understand why you think it would.
The GBP 97 million that's coming through as changes to the estimates for decommissioning, that, that's not all price increase, that's also scope increase. There's a significant portion of that is to do with the Captain EOR Phase II project, and obviously, as you drill wells and install infrastructure, you have a liability to book in terms of, of, of taking that out in due course. That's a substantive part of that revision to estimates. There are some, you know, decom activities on ongoing, you know, relatively low level activity, and certainly, you know, we've got a relatively low decommissioning estimate in, in, in totality. The activity we're doing right now, it tends to be trickier stuff.
It's trickier wells that we're executing for, for integrity purposes and, and kind of good stewardship of our asset base. No, nothing, nothing material, I think, is the summary in terms of changes in decommissioning, at a relatively normal business.
Great. That's really helpful. Thank you very much indeed.
Thanks, Chris.
This concludes our Q&A. I'll now hand back to Gilad Myerson, Executive Chairman, for closing remarks.
Very good. Well, thank you very much for your interest in our company. We're very happy to share our results. We are committed to deliver our strategy for the benefit of our shareholders, and if you have any further questions, we remain ready to answer any potential queries that come from yourselves. Thank you very much.