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    Neptune Snaps Up North Sea Assets

Summary

Israel-focused Energean agreed to buy the North Sea field interests as part of a larger deal with Italy's Edison in July, but considers them non-core.

by: Joseph Murphy

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Natural Gas & LNG News, Europe, Premium, Corporate, Mergers & Acquisitions, Exploration & Production, News By Country, United Kingdom

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Neptune Snaps Up North Sea Assets

UK-based Neptune Energy has entered into a conditional deal to buy Edison E&P’s North Sea assets from Israel-focused Energean Oil & Gas for up to $280mn.

Under the sales agreement, Neptune will acquire a 25% interest in the Glengorm gas condensate discovery in the UK central North Sea, the company said on October 14. It will also buy Edison E&P’s shares in the Nova (15%) and Dvalin (10%) gas projects off the coast of Norway, and assume its interests in the smaller Scott (10.5%), Telford (15.7%), Tors (68%), Wenlock (80%) and Markham (3.1%) UK assets.

The sale is contingent on Energean finalising its takeover of Edison E&P, announced in July. Neptune will pay $250mn in cash plus a further $30mn contingent payment depending on extra resources included in future development plans.

When Energean launched its bid to buy Edison E&P, the upstream arm of EDF-owned Edison, its primarily aim was to expand its operations in the eastern Mediterranean. In contrast, it viewed Edison’s North Sea business as non-core.

Neptune, meanwhile, is looking for assets that will complement its existing operations. It is set to add 30mn barrels of oil equivalent to its proven and probable (2P) reserves through the purchase. The CNOOC International-operated Glengorm find lies near to Neptune’s Seagull project, while Nova is expected to be developed using a subsea tie-back to Neptune’s Gjoa field and should start up in 2021.

Dvalin is slated to be tied back to Equinor’s Heidrun field. Four gas wells are scheduled to be drilled there starting at the end of 2019, with first gas expected a year later. Among the remaining assets, Tors is considered “strategically important”, Neptune said, as it will share the same export route as the company’s Cygnus field.

“The assets are an excellent fit with our North Sea portfolio,” Neptune CEO Jim House said. “Nova and Dvalin are expected to add 12,000 boepd to our production base over the next two years and Glengorm adds significant potential for the longer term.”

The transaction is expected to close in early 2020, subject to usual approvals and Energean completing its takeover.

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