29th Jun 2020 10:25
(Alliance News) - Energean PLC on Monday said it has entered into amended terms for its Edison E&P acquisition and will pay out USD466 million less than originally planned.
Edison is part of France's EDF Group.
Shares in Energean were up 13% at 500.00 pence in London in morning trading.
The Mediterranean-focused gas producer said it has inked further amended terms for the deal, originally announced in July 2019, that now exclude Edison E&P's Norwegian subsidiary.
This, along with the previous exclusion of Edison E&P's Algerian asset, means that the gross price tag has fallen to USD284 million from USD750 million.
The USD466 million reduction in sale price includes a USD155 million from the Algerian exclusion and USD200 million from the Norwegian exclusion. The remaining USD111 million is due to "additional reductions relating to the macro environment".
A net amount of USD178 million would have been payable had the deal completed on May 31. This number is unlikely to change materially before the actual deal completes.
Ediscon E&P's UK North Sea subsidiaries, including interest in the Glengorm and Isabella gas-condensate discoveries, are to be included within the deal. The contingent payment for the Cassiopea gas development project in Italy will be between nothing and USD100 million, based on future Italian gas prices when first gas production is delivered.
Energean has signed a reserve-based lending facility with Natixis, ING and Deutsche Bank - replacing an acquisition bridge facility taken out last year. Shareholders will vote on the transaction July 20.
Remaining government approvals should take place "in the next few months", with Energean aiming to complete the acquisition "as soon as possible" in the second half of the year.
Energean said it will have working interest proved and probable plus best estimate contingent resources of over 800 million barrels of oil equivalent, of which 72% is gas - around 96 billion cubic metres. About 85 bcm of this will be sold under long-term gas pricing contracts that mostly insulate revenue from price fluctuation.
Energean set its 2020 pro forma production guidance between 44,500 barrels and 55,500 barrels of oil equivalent per day.
Pro forma capital expenditure guidance has fallen to between USD760 million and USD780 million from the previously expected USD840 million, despite including between USD25 million to USD30 million of UK North Sea capex. This reflects another USD85 million to USD110 million cut to underlying capex guidance.
Energean Chief Executive Mathios Rigas said: "I look forward to completing the transaction, which I believe represents excellent value for our shareholders and also enhances our material, gas-focused platform for value creation in the eastern Mediterranean. Upon completion, our core focus, alongside the Karish project, will be integrating our teams and portfolios, which will further secure our long-term, resilient cash flow profile and option-rich portfolio.
"Following completion, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenues against oil price volatility. We will continue to own and operate the majority of our asset base, and are well-funded for all of our projects.
"Our financial and operational positioning will ensure that we can continue to grow the business but also respond quickly and appropriately to changes in the macro environment, if needed, to protect our business and our shareholders."
By Anna Farley; [email protected]
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