Fitch Puts Ithaca Energy Rating on Watch Positive After Suncor Canada Deal

Fitch has placed Ithaca Energy’s BB- rating on Rating Watch Positive, meaning an upgrade is possible, following its planned purchase of offshore Canadian assets from Suncor. Ithaca Energy (LON: ITH), a UK North Sea oil and gas producer, announced the rating action at 7am today.

The shares stood at 276.4p at 9.12am London time, a delayed quote, up 0.66% from yesterday’s close of 274.6p. They opened at 275.8p and have traded between 272.6p and 279p so far today.

Over the last three months the shares are higher. They were 229.4p on 8 July, with a low close of 220.6p on 10 July and a high close of 296.2p on 18 September, which is still above today’s price.

The acquisition from Suncor Energy Inc. was announced earlier this week. Ithaca said Fitch had placed its Long-Term Issuer Default Rating, the agency’s measure of the company’s ability to meet its debts, on Rating Watch Positive as a result.

BB- is a sub-investment-grade, or high-yield, rating. A Rating Watch Positive means Fitch sees an upgrade as possible. It is a statement about credit quality, not about earnings.

Ithaca said Fitch cited the greater scale and geographic diversification the deal brings. Ithaca said Fitch also pointed to exposure to a stable jurisdiction with a more favourable fiscal regime than the UK Continental Shelf, the UK’s offshore oil and gas territory.

Rival agency Moody’s reaffirmed Ithaca’s Ba3 rating, its equivalent grade. Chief financial officer Iain Lewis said the agencies’ response backed the company’s strategy.

We are pleased that our strategic acquisition of offshore Canada assets announced earlier this week, has been received positively by rating agencies, validating the Group’s growth strategy that focuses on building ‘Scale. Stability. Strength.’

Iain Lewis, chief financial officer, Ithaca Energy

Ithaca said it would keep working with the ratings agencies as the deal moves towards completion.