Greek oil company Energean has agreed to sell Edison E&P’s UK and Norwegian subsidiaries to Neptune Energy for $250 million of cash, to be adjusted for working capital, with additional cash contingent consideration of up to $30 million.
As previously reported, Energean in July proposed to acquire Edison Exploration & Production (Edison E&P) from Edison for an initial consideration of $750 million. Edison E&P’s portfolio of assets includes producing assets in Egypt, Italy, Algeria, the UK North Sea and Croatia, development assets in Egypt, Italy, and Norway.
According to Energean, the sale of Edison E&P’s UK and Norwegian subsidiaries is contingent on Energean completing its proposal to acquire Edison E&P and “is expected to close as soon as is reasonably practicable thereafter.”
Energean said that the sale of the UK and Norwegian businesses to Neptune was in line with Energean’s strategy to become the largest independent gas-focused E&P company in the Mediterranean, and its intention to dispose of non-core assets.
The Edison E&P UK and Norway subsidiaries include the Nova (15% Working Interest) and Dvalin (10% Working Interest) gas developments offshore Norway, and in the UK, the producing Scott (10.5% Working Interest), Telford (15.7% Working Interest), Tors (68% Working Interest) and Wenlock (80% Working Interest) fields, the Markham asset (3.1% Working Interest), the Glengorm discovery (25% Working Interest) and the Isabella licence (10% Working Interest), upon which an exploration well is expected to spud in the coming weeks.
Combined, the subsidiaries represent $408 million of 2018 Gross Assets and $33 million of 2018 Losses before Tax, Energean said.
Neptune will take on the Edison UK and Norway employees and has agreed to guarantee their terms of employment and severance pay for a period of 18 months from completion.
Mathios Rigas , Chief Executive of Energean, said: “The acquisition of Edison E&P established Energean as the leading independent, gas-focused E&P Company in the Mediterranean with a mainly-operated, low-cost, gas-weighted portfolio and a highly experienced team to prosper in our rapidly changing industry. At the time of the announcement, we committed to our Shareholders that we would seek to dispose of non-core assets that do not adhere to our strategy.
“I am delighted to be able to make this announcement today, which demonstrates our commitment and capability to deliver upon our stated goals. Neptune is a leading player in the UK and Norway upstream sectors and, as such, we are convinced that under Neptune’s ownership, Edison E&P’s UK and Norway teams will benefit from the increased focus and investment that will result from this strategic alignment.”
In a separate statement on Monday, Neptune said that the portfolio of Edison E&P’s UK and Norwegian business would provide Neptune with material growth in contingent resources, an estimated 30 million barrels of oil equivalent (mmboe) of 2P reserves and near term production in core areas of the North Sea close to infrastructure.
Jim House , CEO of Neptune, said: “The assets are an excellent fit with our North Sea portfolio. Nova and Dvalin are expected to add 12,000 boepd to our production base over the next two years and Glengorm adds significant potential for the longer term.”
The transaction is subject to customary regulatory approvals, with completion expected early in 2020.