Energean Buys Edison E&P
Greek Energean Oil & Gas announced July 4 that it has agreed to acquire Edison Exploration & Production (Edison E&P) for $750mn.
The acquisition of Edison E&P from parent Edison, the wholly-owned Italian subsidiary of French power giant EDF, is in line with Energean’s strategy of creating an independent, gas-focused E&P company in the Mediterranean, the Greek company said in a statement. The deal is subject to regulatory and shareholder approval. Energean hopes to complete the purchase by the end of 2019.
London- and Tel Aviv-listed Energean will buy a portfolio of development, appraisal and exploration opportunities that will expand its scale and diversification. Edison E&P holds producing assets in Egypt, Italy, Algeria, the UK North Sea and Croatia. Its development assets are in Egypt, Italy and Norway.
The portfolio adds working interest 2P reserves of 292mn barrels of oil equivalent and 2018 net working interest production of 69,000 boe/day. Gas contributes 76% of Edison E&P’s 2P reserves and 80% of its 2018 production, complementing Energean’s gas-focused transition fuel growth strategy.
The enlarged group will have a total of 639mn boe of 2P reserves, with production set to reach more than 140,000 boe/day by 2021, when the Karish and Tanin development project comes onstream, Energean stated. A target of 200,000 boe/day could be hit once the Energean Power FPSO reaches full capacity, it added.
The initial consideration of $750mn will be adjusted for working capital, Energan said in its statement. An additional contingent consideration of $100mn will be payable following first gas from the Cassiopea development offshore Italy, which is expected in 2022.
Energean will fund the acquisition through a $600mn bridge loan and up to $265mn of equity financing via a placement of new ordinary shares announced for July 4. The volume of new shares will not exceed 19.99% of the existing share capital.
Edison E&P adds 2018 EBITDAX of $434mn and operating cash flow of $302mn. It supplements the long-term profile with sustainable cash flows that are largely shielded from commodity price fluctuations due to the gas sales agreements in place and supports the company’s medium-term ambition to pay a dividend, the Greek buyer noted.
“The acquisition of Edison E&P establishes Energean as the leading independent, gas focused E&P company in the Mediterranean,” said CEO Mathios Rigas. “It will diversify Energean into a multi-country, multi-asset, full-cycle E&P company with scale, material cash flows, significant growth and portfolio optionality.”