Fitch places Ithaca Energy on positive rating watch

The following is a press release from Fitch Ratings: Fitch Ratings-London-07 October 2026: Fitch Ratings has placed Ithaca Energy plc's 'BB-' Long-Term Issuer Default Rating (IDR) on Rating Watch Positive (RWP). The RWP reflects Fitch's expectation that the acquisition of interests in various offshore fields in Canada will bring higher scale in terms of cash flows and production volumes and will improve geographic diversification with exposure to a stable jurisdiction with a more favourable fiscal regime than for the UK Continental Shelf (UKCS). We forecast somewhat higher financial leverage, albeit still strong, and proved reserve life remaining low. We expect a time lag between acquisition close and the full benefit of the transaction being realised. Therefore, we expect resolution of the RWP will likely culminate in assigning Ithaca's IDR a Positive Outlook, provided that the acquisition is completed. We will resolve the RWP once the transaction closes, which may take longer than six months. Key Rating Drivers Acquisition is Credit Positive: Ithaca's strategy has historically included a stated intention to diversify, replenish and grow reserves partly through inorganic means. The company has a record of executing transformational and bolt-on transactions that have benefited the business profile, increasing production and reserves, while leverage has remained low. We expect the proposed transaction will be credit positive, bringing geographic diversification with exposure to a more favourable regulatory and fiscal environment in Canada and larger scale of production and reserves. This will be partially offset by our expectation of higher, although still low, financial leverage and the assets being subject to a gradual ramp-up of production through end-2027 and moderate associated capex through end-2028. We view positively the company's record of balancing acquisitions with maintaining company-defined EBITDAX net leverage below 1.25x through the cycle. Favourable Production Dynamics: 1H26 production reached 128kboe/d with management guiding towards 120-130kboe/d for 2026. This is an increase from 2025 levels of around 119kboe/d and reflects a combination of higher contribution from acquisitions in 2025 as well as successful organic development activity. We conservatively assume full-year production for 2026 of 125kboe/d with the acquisition pushing production to around 140kboe/d in 2027 and a run-rate average of around 145kboe/d through 2030 once certain production optimisation projects at the Canadian assets are completed. Reserve Life Remains Moderate: We estimate that, pro forma for the transaction, combined 1P reserves will increase to around 285mmboe implying a 1P reserve life of around 5.2 years (based on 145kboe/d of average post-acquisition production), which is generally in line with pre-acquisition reserve life and is a weak point of the credit profile. This level of 1P reserve life is average for other UKCS-focused producers

Geographic business diversification while maintaining EBITDA net leverage below 1x or FFO net leverage below 1.5x Liquidity and Debt Structure Ithaca Energy held USD571 million of cash and USD1.3 billion of availability under its reserve-based loan facility at 30 June 2026 and has no short-term maturities. Issuer Profile Ithaca is an exploration and production company focusing on the UK North Sea while the contemplated acquisition will add several producing assets offshore Canada. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The Climate.VS for 2035 is 53 out of 100. Ithaca Energy's main transition risks stem from demand reductions due to policies lowering oil and gas use, rising financing costs, and investor pressure toward lower-carbon energy, alongside shorter-term policies limiting emissions from oil and gas production. Ithaca targets net zero Scope 1 and 2 emissions (net-equity basis) by 2040, with a 50% absolute reduction by 2030 against a 2018 baseline; net-equity Scope 1 emissions fell 28% against this baseline in 2025. The company maintains methane intensity below 0.2% (2025: 0.052%) and targets zero routine flaring by 2030. These risks do not have an immediate impact on the rating, given the very long timescale over which the transition may take place, and uncertainty regarding the extent and nature of changes and markets and companies' reaction to them. Any potential future impact on the rating may differ from the illustrative rating impact in the Climate.VS framework, reflecting the evolution of Fitch's assessment of the global risks, action the entity might take to adapt to or mitigate the exposure, and any other relevant factors. ESG Considerations Ithaca Energy plc has an ESG Relevance Score of '4' for GHG Emissions & Air Quality due to the company's operations in a stringent climate-related regulatory environment, high cost of production and energy transition strategies focusing only on Scope 1 and 2 emissions. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Ithaca Energy plc has an ESG Relevance Score of '4' for Waste & Hazardous Materials Management; Ecological Impacts due to high decommissioning obligations relative to global peers, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', u