Edison E&P Portfolio includes nearly 90 licences in nine countries in the Mediterranean and Northern Europe. Included in this, are producing assets in Egypt, Italy, the UK North Sea, Algeria, and Croatia, along with development assets in Egypt, Italy and Norway.
Through the acquisition, Energean will be adding 292 MMboe (76% gas) in working interest 2P reserves and 2018 net working interest production of 69 kboe/d (80% gas).
The deal creates a business with total reserves of 639 MMboe and operating cash flow of $302m.
The transaction price includes an initial up-front of $750m based on the enterprise value of Edison E&P and $100m contingent consideration based on bringing the offshore Cassiopea development gas project in Italy into production, which is expected to occur in 2022.
The transaction covers the transfer of Edison’s future decommissioning obligations to Energean. Furthermore, Edison will be entitled to receive royalties about further potential developments in Egypt, taking the total value of the transaction close to $1bn.
The deal will provide the financial means that will support Edison’s strategic development plan, which comprises significant investments in Italy in the 2019-2021 three-year period targeted mainly to support its renewable-energy portfolio, retail activities and energy-efficiency services.
Edison E&P’s 282 employees, will be joining the existing Energean team, ensuring coverage of all key areas of the combined portfolio.
Energean explained that the acquisition of Edison E&P on attractive metrics is in line with Energean’s strategy of becoming an independent, gas-focused E&P company in the Mediterranean, now considered a “very hot area” for oil and gas exploration and production companies.
With this in mind, Edison’s portfolio outside the Mediterranean area might not be accounted, since it’s outside the company’s core focus. Energean chief executive Mathios Rigas said “We are focused on the Mediterranean. That’s our footprint. That’s what we understand. The North Sea is outside our key competence, and we would look for ideas and opportunities for those assets. But they’re not our assets yet. First, we need to wait for the deal to close.”
The closing of the transaction is expected to take place by the end of 2019.