Ithaca Energy Ltd. hopes to become the second largest independent oil and gas producer in the U.K. North Sea with a $2 billion deal to acquire Chevron North Sea Ltd.

The Delek Group Ltd. subsidiary said May 30 that the deal for Chevron Corp.'s North Sea business will add 10 producing field interests to its existing portfolio. As a result, Ithaca's asset base would have proved and probable reserves of approximately 225 million barrels of oil equivalent, plus 45 MMboe of proved and probable contingent resources.

Ithaca would also own a total of 18 producing field interests, which are expected to yield pro forma 2019 production of about 80,000 boe/d, consisting of 60% liquids, at an operating cost of approximately $17 per boe.

Ithaca plans to fund the deal through an upsized $1.65 billion reserve based lending senior debt facility, a $700 million acquisition debt financing facility, an equity investment by Delek and its existing cash resources. The company will retire its existing $300 million term loan and associated Delek guarantees as part of the refinancing.

The transaction is expected to close around the end of the third quarter, subject to approval by the U.K. Oil and Gas Authority. It has an effective date of Jan. 1. The price payable at completion would be about $1.65 billion, subject to adjustments for transfer of working capital.

JP Morgan is acting as financial adviser to Ithaca for the transaction.