Energean announced a significant business deal to the London and Tel Aviv stock exchanges today (Thursday). The company has agreed to transfer to Carlyle International Energy Partners its portfolio in Egypt, Italy and Croatia for a consideration of up to $945 million and not less than $820 million.
completion of the deal is expected by the end of the year, subject to receipt of all necessary regulatory and antitrust approvals.
Key features of the deal
⦁ A price of up to $945 million is more than triple the cost of acquiring these assets, which was $284 million in 2020.
⦁ Transfer value of $5.4 per barrel (proved 2P reserves) of oil equivalent, compared to an acquisition cost of $1.2 per barrel.
⦁ Additional potential price based on Energean's recent discovery in Egypt.
⦁ Payment of $504 million upon formal completion of the deal.
⦁ Immediate generation of free cash flow.
⦁ Creation of sufficient cash liquidity for Energean to fully repay the $450 million Corporate Bond and facilitate the payment of a special dividend of up to $200 million to shareholders.
⦁ Savings of at least $7.5 million per annum in administrative revenues.
The strategy that led Energean to the transfer agreement
⦁ The transfer of the assets in Egypt, Italy and Croatia allows Energean to streamline its portfolio, further focusing on its gas-based growth strategy, which is marked by the development of the Karish and Karish North fields in Israel as well as the recent entry into the Anchois field in Morocco. It is a strategy that enhances the economic development prospects of the portfolio, generates free cash flow and maximises shareholder benefits.
⦁ The transfer agreement also improves the quality of Energean's portfolio by transferring more than 60% of the company's liabilities for decommissioning old fields, resulting in improved cash flows in the medium to short term.
⦁ Going forward, Energean will seek to grow further in the Mediterranean but also seek opportunities in Europe, the Middle East and Africa, especially in regions where there is long-term policy support for gas and coal replacement.
⦁ The group will also focus on creating a carbon storage hub in Greece and the wider Mediterranean region through its subsidiary, EnEarth.
⦁ Upon completion of the agreement, the company's carbon footprint (Scope 1 and Scope 2) will be reduced by 40% to 5 kg of emitted CO2 per barrel of oil equivalent produced, achieving 10 years earlier the target set for 2035.
Energean plc Group CEO Mathios Rigas said, "Today, we are capitalising on a significant return on the investment we made when we acquired this portfolio four years ago. The terms of the deal and the anticipated distribution of a one-time dividend serve as evidence that the transfer leverages our strategy to maximize value for our shareholders and confirms our utterly disciplined approach to capital deployment.
He added, "looking forward, the deal unlocks significant management potential and provides financial flexibility to drive future growth. Our focus will now be on creating enhanced value from our portfolio in Israel as well as evaluating new opportunities that fit with Energean's operating philosophy: growth, paying a reliable dividend, loan impairment and commitment to our Net Zero target.
"Carlyle is the right custodian for the transferred assets and will be an excellent home for our colleagues, to whom we wish every success and whose progress we will monitor. I would like to personally thank all my colleagues in Egypt, Italy and Croatia for their hard work and dedication over the years."
