$945 million sale deal for ‘high-quality’ assets on shaky ground as uncertainty abounds

London-based oil and gas player Energean has spotted the gathering of potential clouds on the divestment horizon for its portfolio in Egypt, Italy, and Croatia with an enterprise value (EV) of up to $945 million, of which $820 million is firm. This sale is designed to pave the way for the greater pursuit of gas-weighted portfolio growth in the Mediterranean and the wider Europe, Middle East, and Africa (EMEA) region.

The company disclosed a binding agreement for the disposal of its portfolio in Egypt, Italy, and Croatia in June 2024. These assets were to be acquired by an entity controlled by Carlyle International Energy Partners, allowing Energean to realize more than a threefold return on investment since the portfolio was acquired for $284 million in 2020. While the completion of the transaction was expected by year-end 2024, it was still subject to customary regulatory and antitrust approvals.

In August 2024, the firm underlined that the completion of the transaction was conditional upon customary regulatory approvals in Italy and Egypt alongside antitrust approvals in Italy, Egypt, and the Common Market for Eastern and Southern Africa. As a result, the transaction was subject to such conditions being satisfied by a longstop date of March 20, 2025, or such other date as may be agreed by the duo. 

As certain regulatory approvals in Italy and Egypt have not yet been obtained by Carlyle or waived, Energean claims to have no assurance that such conditions will be satisfied on or before this date per the terms of the binding sale and purchase agreement. The matter is further compounded by the fact the firm has not been able to reach an agreement with Carlyle to extend the long stop date beyond March 20, 2025.

Therefore, Energean points out there is “a significant risk” that the outstanding conditions precedent will neither be satisfied nor waived by the relevant long stop date; thus, the transaction may be terminated unless an extension is agreed. The company has reiterated its commitment to closing the transaction under the terms of the SPA and maximizing return for shareholders, such as its ongoing dividend program—with or without the disposal being given the go-ahead.

Mathios Rigas, Chief Executive of Energean, commented: “Although the necessary regulatory approvals have not yet been obtained by Carlyle, we remain committed to closing the transaction. These are high-quality, diversified assets with significant growth potential and, if the transaction does not close, we will assess all strategic options, focussing, as always, on the best interests of our shareholders keeping in mind the need for diversification, scale, dividend accretion and growth.” 

Energean has confirmed its focus on achieving its key business drivers, which encompass paying a reliable dividend, deleveraging, growth, and a pledge to net zero. If the divestment of assets in Egypt, Italy, and Croatia is completed, the firm’s Scope 1 and 2 emissions intensity will be slashed by around 40% to about 5 kg CO2e/boe, boosting the firm’s 2035 target of 4-6 kg CO2e/boe by ten years.

The decarbonization drive has led the firm to dip its toes into carbon capture and storage (CCS). EnEarth, an Energean subsidiary, recently confirmed that the European Commission earmarked a grant of around €120 million for its Prinos CO2 Storage project, said to be the first of its kind in Southeastern Europe and the East Mediterranean.

The project is perceived to be an integral part of the Mediterranean CCS Strategic Plan developed by France, Italy, and Greece, aiming to create the first industrial/commercial-scale CO2 storage hub in the Southeast Mediterranean.