Energean to Buy out Israeli Field Partner for up to $405mn
Mediterranean-focused Energean has entered a deal to buy private equity fund Kerogen's 30% shares in the Karish and Tanin gas leases off Israel for between $380mn and $405mn, the company said on December 30.
Energean revealed it was in talks with Kerogen in early December on the deal, which would raise its ownership of the flagship Karish project to 100%. The company is fresh from closing its $284mn takeover of the upstream arm of Italy's Edison earlier this month, which gave it positions in Croatia, Egypt, Italy and the UK.
The deal with Kerogen involves a $175mn upfront payment on completion, anticipated in the first quarter of 2021, and between $155mn and $180mn in deferred payments after the Karish project has reached first gas, which is expected in the fourth quarter of next year. It also includes $50mn of convertible loan notes that mature in December 2023, and have a £9.50 ($12.9) strike price and a zero coupon rate.
Energean CEO Mathios Rigas said the acquisition was "a unique opportunity, given our existing, unrivalled understanding of the assets and the fact that the position significantly enhances Energean's cash flow, whilst generating no incremental general and administrative costs."
"It allows us to consolidate our interests in Israel, enabling us to further generate long-term value by capitalising on the production growth and upside potential of our acreage offshore Israel; and is supportive of our ambition to be the leading independent gas producer in the Mediterranean," he continued.
The Karish, Karish North and Tanin fields located within the Israeli leases had their 2P reserves certified last month at 98.2bn m3 of gas and 99.6mn barrels of liquids. A final investment decision on developing the Karish and Tanin was reached in 2018, and Energean said as recently as November it expected to greenlight Karish North by the end of this year.
The agreement with Kerogen comes under two weeks after Energean struck deals with Israeli utility Rapac Energy on the supply of an extra 0.4bn m3/year of gas from Karish, bringing contracted sales to 7.4bn m3/year. Energean will produce gas from its Israeli fields using a 8bn m3/yr floating production storage and offloading unit. Kerogen originally held 50% of Energean Israel, the operating company, but sold 20% to Energean.