Energean acquisition of Edison E&P : Italian energy company Edison has signed a deal worth up to $850 million to offload its oil and gas business, which operates under the name Edison Exploration & Production (Edison E&P), to Mediterranean-focused Energean Oil and Gas.
Edison, which is a subsidiary of French state-owned energy company Électricité de France (EDF), had bundled its activities, corporate shareholdings and mining titles in its hydrocarbons business across Italy and other countries, into Edison E&P.
The Italian energy company intends to mainly use the proceeds from the transaction towards electricity generation from renewable and gas sources apart from strengthening its operations in the retail energy market and energy efficiency services.
Edison E&P’s portfolio features close to 90 licenses across nine countries located in the Mediterranean and Northern Europe regions, which includes producing assets across Italy, Egypt, the UK North Sea, Croatia, and Algeria. The portfolio also has development assets located across Italy, Egypt, and Norway.
Energean acquisition of Edison E&P
As far as the terms of Energean acquisition of Edison E&P are concerned, the transaction price is a combination of $750 million in initial consideration based on the enterprise value of the Edison oil and gas business and a contingent consideration of $100 million to be made upon the commissioning of the Cassiopea development gas project offshore, possibly in 2022.
Edison will also stand to get royalties related to additional potential developments across Egypt, which takes total transaction value close to $1 billion.
The transaction also includes the transfer of all future decommissioning obligations held by the Italian energy company to Energean.
Energean acquisition of Edison E&P will result in the addition of 292 mmboe in working interest 2P reserves and a total working interest production of 69 kboe/d in 2018 to the former’s portfolio.
The UK-based Energean has taken up the acquisition as part of its strategy to become a leading independent, gas-focused exploration and production company in the Mediterranean Sea. Energean acquisition of Edison E&P will also significantly boost the former’s scale and diversification owing to the complementary portfolio of accretive development, appraisal, and exploration opportunities, emerging from the latter’s portfolio.
The consolidated company is anticipated to have a production capacity of more than 140 kboe/d in 2021, once Energean’s Karish and Tanin development project is commissioned. It is further expected to increase to about 200kboe/d after the Energean Power FPSO hits full capacity.
Commenting on Energean acquisition of Edison E&P, Mathios Rigas – Chief Executive of Energean, said: “The acquisition of Edison E&P establishes Energean as the leading independent, gas focused E&P company in the Mediterranean with a mainly operated, low cost, gas weighted portfolio, with the capability, focus and team to prosper in our rapidly changing industry. 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. Edison E&P brings with it an exceptional team and I look forward to working with them as we build on the multiple opportunities ahead of us.”
“Together, our priority is to maximise the economic value of the combined portfolio, whilst retaining as a key priority delivery of Karish and Tanin First Gas into Israel in Q1 2021. Since 2007, Energean has delivered significant growth and value for our investors and this acquisition is the next important step on this growth and value journey.”
Closing of Energean acquisition of Edison E&P is expected to occur in the fourth quarter of this year after receiving the necessary anti-trust and regulatory approvals, and approvals from shareholders.