Marubeni Buys into Galp's Distribution Unit

Portuguese oil and gas group Galp said July 29 that a Marubeni-led consortium with fellow Japanese firm Toho Gas will pay €138mn for a 22.5% stake in distribution subsidiary Galp Gas Natural Distribuicao (GGND).

The deal gives an implied enterprise value for 100% of GGND of €1.3bn, 27% more than its regulated asset base (RAB) and an enterprise value multiple of 11.5 times its expected 2016 Ebitda.

Prior to transaction completion, GGND will raise stand-alone funding to reimburse existing €568mn shareholder loans, leading to total cash proceeds to Galp of €700mn. Following completion, expected 4Q 2016, Galp said it will cease to fully consolidate GGND into group accounts.

Chinese state companies own equity stakes in Portugal's other main energy firms: electric utility EDP and power and gas grid owner-operator REN.

Galp meanwhile reported net 2Q 2016 profit July 29 of €133mn, down 29% from the €189mn year-ago level. Upstream earnings declined 27% due to low oil prices despite a year-on-year production increase, while refining earnings fell 38% because of lower margins, but gas earnings grew 10% “benefiting from new sourcing,” with the company importing Europe’s first US LNG import cargo during the period.

In Galp’s upstream, it said it was focusing on “improving the Floating LNG solution at Coral” in Mozambique where it has 10% equity. But like project leader Eni, it gave no fresh guidance on when the final investment decision on Coral FLNG would occur.

Mark Smedley