Shares in Ithaca Energy gushed by 9.3% after the North Sea-focused company revealed its annual oil output hit the top end of its forecast.

It produced 80,200 barrels of oil equivalent per day (boepd) last year, just shy of its 81,000 boepd guidance. In Q4 it hit 116,000 barrels per day with a peak one-day output of 138,000.

The boost in production followed Ithaca’s £754 million acquisition of nearly all Eni UK’s upstream oil and gas assets in October.

It supports its plans to grow in the region as other oil firms scale back operations because of the windfall tax, or energy profits levy, on oil and gas profits.

The levy, introduced in 2022 under the Tory government, imposes a 38% surcharge on profits from extraction activities in the North Sea. It was extended by the incoming Labour government.

Combined with a 30% corporation tax rate and a 10% supplementary rate, the total tax rate on UK oil and gas output is one of the world’s highest at 78%.

Yaniv Friedman, executive chairman, said: “We enter 2025 with a stronger, more diverse production and reserves base, significant investment optionality, increased financial strength and an enhanced strategic platform.

“We continue to see material opportunity in our home basin, with an eye on international expansion, providing a range of strategic options for growth.”

Following the Eni deal, Ithaca became the biggest resource holder and the second-largest independent oil and gas company in the UK Continental Shelf in terms of production levels. 

It also has stakes in six of the ten biggest UK North Sea oil and gas fields, including the Rosebank development, which has estimated recoverable reserves of 300 million barrels. The company said the Rosebank project remains on track to targeted first production date of 2026/27.

Last month, a judge in the Court of Session in Edinburgh ruled that consent to develop the Rosebank and Jackdaw fields was granted unlawfully, but said preparatory work could continue while environment assessments were carried out.

Luciano Vasques, chief executive, commented: “Our 2024 performance exceeded expectations and the combination of the business with the Eni’s UK assets is demonstrating its value.

“The integration is progressing well, with both operational and systems aspects well on track.

“We are progressing on all fronts of our organic growth projects, and welcome the recent Judicial Review ruling on the Rosebank development, which supports its continued progression.

“The Rosebank development is good for the UK, it supports 2,000 UK jobs in its construction phase, increases UK energy security and contributes significant tax receipts to the Government.”

Iain Lewis, chief financial officer, added: “With production at the top end of guidance and operational costs driven lower than guidance, our financial performance in 2024 was strong.”

While Ithaca’s shares soared to 148.2p before closing at 143.4p, up 12.2p.

The board paid a $200m special dividend in December 2024 ($300m in total for 2024), supporting a 2024 dividend target of $500m.