Ithaca Energy’s interim profit fell sharply as production shrank by almost 30 per cent and gas prices dropped.

The company, focused on the North Sea, trimmed its production forecast for the full-year but highlighted the transformational nature of its acquisition of most of Eni’s UK assets.

That all-share deal, worth more than £750 million, is expected to be completed before the end of the year. Ithaca believes this will give it a platform to become the largest North Sea producer by 2030, extracting more than 100,000 barrels a day, while also allowing it to expand internationally.

Ithaca, based in Aberdeen, is one of the largest independent producers in the North Sea and returned to the London stock market in 2022, having previously been taken private. It remains majority owned by the Israeli conglomerate Delek Group.

Ithaca’s revenue in the first half of the year was $841.9 million, down from more than $1.2 billion in the same period last year.

Production dropped to 53,046 barrels of oil equivalent a day, down from 75,755 barrels a day in 2023. The fall was partly a result of operational problems across assets that it does not operate and planned shutdowns on some sites it does run.

The realised gas price was equivalent to $92 per barrel of oil for the first six months of this year, compared with $125 per barrel in 2023.

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Adjusted profits fell 45 per cent to $533 million from $979.7 million in the same period last year. At the pre-tax level, profits fell to $189.4 million from $248.7 million.

Ithaca said the Eni combination would allow it to pay dividends worth $500 million for 2024 and 2025, up from guidance of about $400 million previously.

Werner Riding, from Peel Hunt, said the introduction of the Eni portfolio “should increase Ithaca’s financial strength and improve visibility on long-term production cash flows, supporting ongoing meaningful shareholder returns”.

Yaniv Friedman, Ithaca’s executive chairman, confirmed that the company would look beyond the North Sea for expansion. On a call with analysts, he said: “I don’t think there is anywhere that is off limits. We want a place where we can do more than a one-off transaction but somewhere we can grow in. We are looking at producing assets with potential upside on them.”

Iain Lewis, interim chief executive, said that the industry continues to lobby the government about the UK oil and gas fiscal regime.

Rachel Reeves, the chancellor, has confirmed the energy profit levy will be extended by 12 months to March 2030 and the top rate increased by three percentage points. That could mean companies facing an effective 78 per cent tax rate on their UK profit.

Ithaca booked a charge of $72.8 million for the levy in the first half of 2024, down from $223 million in 2023.

Lewis said talks with Westminster were “extremely active” and that he believes politicians are aware of the potential job, trade and energy security implications if North Sea output were to decline more quickly.

According to Lewis, Ithaca has a number of projects on which it expects to take a final investment decision towards the end of this year or early in 2025.

He said: “We have the capital which is able to be deployed, but it has to be deployed in an appropriate fiscal regime. The UK will need significant amounts of hydrocarbons in the next 25 to 40 years whatever direction we move on in net zero.”

Ithaca said work on the Rosebank field, where it is a junior partner and Equinor is the operator, was continuing, with production on course to start late in 2026 or in the early months of 2027.

It is also continuing to look at bringing in a partner on the Cambo field and is working on decarbonising offshore platforms where possible.

Shares in Ithaca were down by 7¼p, or 5.5 per cent, to 123¾p by the close on Thursday.