(Bloomberg) -- UK oil and gas producer Ithaca Energy Ltd. is preparing an initial public offering in London this year that could raise about $1 billion, according to people familiar with the plan.

The unit of Israel’s Delek Group Ltd. has hired Morgan Stanley and Goldman Sachs Group Inc. as lead underwriters, the people said, asking not to be identified as the matter is private. The company has also appointed multiple banks as bookrunners for the proposed offering which could value the business at as much as $6 billion, the people said. Delek’s shares rose as much as 6.1%.

Deliberations are ongoing and no final decisions have been made, according to the people. If the offering goes ahead, it would be a rare European share sale as companies have stayed away with equity markets hit by a number of concerns including the fear of a global recession. Ithaca could also decide not to go ahead because of the challenging conditions, the people said. Delek has previously said it plans to sell equity in Ithaca this year, including a possible IPO in London.

Representatives for Ithaca and Morgan Stanley declined to comment, while Delek and Goldman Sachs didn’t immediately respond to a request for comment. 

A successful share sale in Ithaca would make it the largest in the energy sector since Norwegian company Var Energi AS’s $1 billion deal in February this year. The IPO market received a boost this month with the more than $9 billion offering of Porsche AG, potentially giving other companies waiting in the wings some confidence.

Ithaca’s valuation has risen as oil and natural gas prices surging, with Delek saying it was worth $3.1 billion at the end of 2021, up 65% compared with a year earlier. In April, Ithaca acquired Blackstone-backed UK energy producer Siccar Point Energy Ltd. for at least $1.1 billion.  

The listing comes as UK Prime Minister Liz Truss aims to increase domestic fossil fuel production to help boost future supply and calm prices. Ithaca’s Cambo oil field was included in a list published last week by Chancellor of the Exchequer Kwasi Kwarteng of priority infrastructure projects that the government wants to fast track. The project has been targeted by climate activists who criticize further investment in oil and gas in the fight against climate change.

(Updates with Delek shares in the second paragraph, IPO market in the fifth.)

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