Energean plc (LSE: ENOG) has announced that it has entered into a conditional sale and purchase agreement with Kerogen Investments No.38 Limited, an affiliate of Kerogen Capital, for the proposed acquisition of its 30 percent shareholding in Energean Israel Limited (EIL).
As part of the deal, which would result in Energean owning 100 percent of EIL’s share capital, Energean would provide a total consideration of between $380 million and $405 million. The consideration includes an up-front payment of $175 million, deferred cash consideration amounts totaling between $155 million and $180 million and $50 million of convertible loan notes, Energean outlined.
The acquisition adds 2P reserves of 29.5 billion cubic meters of gas and 30 million barrels of liquids, representing approximately 219 million barrels of oil equivalent in total to Energean, the company revealed. Following the deal, Energean will have 2P reserves of 974 million barrels of oil equivalent, the company highlighted.
The deal, which Energean expects to close in the first quarter of next year, is subject to shareholder, regulatory and other customary approvals. The Energean board of directors has already unanimously approved the acquisition and will recommend it to Energean shareholders in an upcoming circular, which Energean expects to publish in late January/early February 2021.
“The acquisition represents 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 G&A costs,” Mathios Rigas, the chief executive officer of Energean, said in a company statement.
“It allows us to consolidate our interests in Israel, enabling us to further generate long-term value by capitalizing 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 added.
Jason Cheng, the chief executive officer of Kerogen Capital, said, “we deeply value the partnership formed with Energean over the recent years, where together, we have seen substantial progress made in advancing the Karish development and expanding the overall resource base”.
“We see this transaction as accretive for both Kerogen and Energean. For Kerogen, it enables the successful value creation to date to be captured, with some upside participation through the convertible notes. For Energean, this represents a unique opportunity to consolidate ownership of its flagship asset,” he added.
Earlier this month, Energean announced that it had entered into an exclusivity arrangement with an affiliate of Kerogen Capital regarding the potential acquisition of Kerogen’s 30 percent shareholding in EIL. The agreement granted a 30-day period of exclusivity for the purposes of negotiating the potential transaction.
Energean also revealed in December that it had completed its acquisition of Edison Exploration & Production S.p.A. from Edison S.p.A.
To contact the author, email firstname.lastname@example.org