Neptune ready but in no rush to sell: press
Six years after its formation, privately owned Neptune Energy has appointed the banks Rothschild and JPMorgan to help it decide on the way forward, according to press reports May 23. The options include further capitalisation from its shareholders; a trade sale; and an initial public offering, they said. Neptune itself has not commented on that.
Expected to be valued at £5,5 ($7.8)bn-£7bn, the company has already repaid its backers Carlyle Group and CVC $800mn in dividends since 2018. And projects now coming on line will boost production by about 30-40% to near 200,000 barrels of oil equivalent/day in the coming few years.
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The company's debt has been growing: it grew $500mn in the year to March 31 and the debt-earnings ratio rose from just under parity to twice Ebitdax. And it has growth plans. But it does also have some $1.2bn for growth which includes mergers and acquisitions.
Private equity backers typically want to exit within five or so years to take profit and put the cash somewhere else: given the prices and outlook last year, such an exit would have probably been value-destructive. With the uptick in oil prices this year, the outlook is now brighter for producers. And with its portfolio heavily biased towards gas (only 25% is oil) and a strong commitment to decarbonising its North Sea activities that is already being acted on in the Netherlands and UK, it is already more future-proofed than many of its peers.
Many deals that did take place last year, such as debt-laden Premier's reverse takeover by Chrysaor, were on an all-share basis, which linked both companies' value to the all-important oil price, rather than the target company's share value over a particular week or month.
If it did take the IPO route, London or Amsterdam would be likely options: weighing on the decision would be the regulatory framework and the ease of doing business for an oil and gas exploration company. London has more oil and gas companies than Amsterdam.