Energean, Edison Revise North Sea Deal
London-listed Energean has agreed a much lower price to buy Edison E&P, while excluding the company's Norwegian assets from the deal, it said on June 29. In a statement, Energean said it would pay $284mn for the business, instead of the originally agreed sum of $750mn.
The Norwegian unit was valued at $200mn, Energean said. Earlier the company's Algerian assets were also excluded following opposition from local authorities, lowering the price by a further $155mn. An additional $111mn reduction related to the macro environment, Energean said. The net acquisition price is less than $1/barrel of oil equivalent (boe), down from the $2.6/boe of 2P+2C when the deal was initially agreed.
Energean struck a deal in July last year to acquire Edison E&P from its parent Edison, the wholly-owned Italian subsidiary of French power giant EDF, for $750mn. It went on to sign a second agreement to sell Edison E&P's North Sea assets to Neptune Energy, but that deal fell through in May.
Energean then said it would try to negotiate the exclusion of Edison E&P's Norwegian subsidiary, but would still purchase the company's interests in the UK's offshore Glengorm and Isabella discoveries.
Taking into account the Edison E&P acquisition, Energean now expects its capital expenditure in 2020 to come to $760-780mn, down from an earlier estimate of $840mn. This is despite $25-30mn in extra costs relating to the UK North Sea projects it is acquiring.
Energean, which produces hydrocarbons in the Mediterranean and is developing reserves offshore Israel, will have 800mn boe in 2P plus 2C reserves after the deal's completion, it said, of which 72% is gas. The company's pro-forma production guidance for the year is 44,500-51,500 boe/d.
"Following completion, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenues against oil price volatility," Energean CEO Mathios Rigas said. "We will continue to own and operate the majority of our asset base, and are well-funded for all of our projects."