Ithaca Energy plc (LON:ITH) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of Diverse Income Trust plc (LON:DIVI)
DirectorsTalk asked: You’ve had a large holding in Ithaca Energy for some time. It reported a strong 2025 and declared a 2025 dividend of £500 million. It’s looking at an increased production capacity trend in 2026 too. Can it continue to support attractive returns through the cycle?
Gervais noted: This is a carbon-based energy supplier, particularly with a strong position in the North Sea and what has been interesting is that actually its carbon intensity and such like is often better than imported oil and gas. Now, clearly, there is going to be a period of moving away from carbon-based energy as we move into local supply, particularly from renewables. Most particularly right now, we need to worry about that period of transition, we need to worry about security of supply and the company continues to take full advantage of its market position.
So, it’s recently farmed into the West of Shetland developments with Tobermory with Shell. This is a big enough project to move the needle for Shell and for a company like Ithaca, albeit £2.8 billion market cap, it has got the opportunity to generate abnormally large amounts of cash, abnormally large amounts of dividends. It has already paid out extraordinarily generous dividends.
Clearly, the oil price might move up, might move down, but most particularly as a company, we think it is superbly positioned not just to generate cash, but actually to continue to succeed as others move away from the North Sea and it gives it a stronger market position.
