Compelling transaction metrics:
- An EV of up to $945 million(1), representing more than a 3x return since the portfolio was acquired for $284 million in 2020(2).
- A firm EV/2P multiple of $5.4/boe, a >4.5x increase versus c. $1.2/boe at the time of acquisition(3).
- Expected to be immediately accretive to free cash flow.
- Energean expects sufficient cash proceeds at closing in order to repay in full the $450 million PLC Corporate Bond and facilitate a special dividend of up to $200 million.
- At least $7.5 million per annum G&A savings identified following the Transaction.
Strategic rationale highlights:
- This sale enables Energean to rationalise the portfolio and focus on its gas-weighted, gas-development strategy, underpinned by the Karish Field in Israel and recent farm-in to the Anchois field in Morocco. This strategy aims to maximise asset monetisation (through a develop and operate model), free cash flow generation and returns to shareholders.
- The Transaction also optimises the portfolio by divesting later life assets, removing over 60% of the Group’s decommissioning liabilities, and improving free cashflow generation in the short to medium-term.
- Moving forward, Energean will maintain and seek to grow its footprint in the Mediterranean and look beyond this to the wider Europe, Middle East and Africa ('EMEA') region, particularly where there is long-term policy support for gas and displacement of coal.
- The Group will also focus on creating a Carbon Storage Hub in Greece and the wider Mediterranean region via its EnEarth subsidiary.
- Post-closing, Energean’s scope 1 and 2 emissions intensity4 will reduce by around 40% to ~5 kgCO2e/boe accelerating its 2035 target by 10 years.
Mathios Rigas, Chief Executive Officer of Energean, commented:
'This deal represents an exciting new chapter for Energean. Today we have realised a significant return on the investment made when we acquired this portfolio over four years ago. The transaction delivers on our strategy and Energean’s ability to maximise value for our shareholders. It maintains our highly disciplined
approach to capital allocation, as demonstrated by the accretive transaction metrics, coupled with an anticipated special dividend.
'Looking ahead, this transaction unlocks management capacity and financial flexibility to drive future growth. Our focus will now be to create enhanced value from our Israel assets, and evaluate new opportunities that fit Energean’s key business drivers: paying a reliable dividend, deleveraging, growth, and our commitment to Net Zero.
'Carlyle is the right custodian of the asset base and will create an excellent home for our colleagues. We wish them every success and look forward to watching their progress. I want to thank all of our colleagues based in Egypt, Italy and Croatia for their hard work and dedication over the years.'
Bob Maguire, Co-Head of Carlyle International Energy partners, commented:
'We are delighted to acquire this portfolio of high-quality assets in Italy, Egypt and Croatia, countries that are actively encouraging new gas development, which we believe will play a central role in the energy transition. We look forward to supporting the transformation of these assets into a scalable E&P platform in the Mediterranean, through the execution of near-term developments, unlocking organic growth opportunities, M&A, and accelerating the delivery of existing decarbonisation plans.'
(1) Of which $820 million is firm. In addition to the $945 million, there is a $/boe contingent payment linked to the recent Location B well in Egypt.
(2) The Edison E&P acquisition also included the UK portfolio, which was ascribed minimal value.
(3) $5.4/boe multiple is based upon the firm EV of $820 million and 150 mmboe of YE23 2P reserves (differences due to rounding). Using the EV of $945 million, the EV/2P multiple is $6.3/boe. $1.2/boe multiple is on the EV of $284 million and 239 mmboe (excludes 4 mmboe of UK volumes) of YE18 2P reserves.
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(energy-pedia.com, 20, June 2024)