Neptune abandons plan to buy Edison’s UK and Norway assets from Energean

Energean has agreed with Neptune Energy to terminate the agreement for Neptune Energy to acquire Edison E&P’s UK and Norwegian subsidiaries from Energean. In turn, Energean is looking to acquire Edison E&P’s UK subsidiaries and exclude the Norwegian ones from the deal.

Neptune’s acquisition had been contingent on the closing of Energean’s acquisition of Edison E&P.

Neptune Energy will pay a $5 million termination fee to Energean.

Energean said on Tuesday that it remains committed to its acquisition of Edison E&P and is working to complete the transaction as soon as possible.

Following the termination of Energean’s agreement with Neptune Energy, in which Neptune was to acquire Edison E&P’s UK and Norwegian subsidiaries, Energean is in discussions with Edison S.p.A. to further amend its Sale and Purchase Agreement (SPA), under which Energean will acquire Edison E&P.

Energean expects to enter into a formal amendment to the SPA in which, inter alia, the Norwegian subsidiary of Edison E&P may be excluded from the perimeter of the transaction.

Energean said it will update the market if, and when, such formal amendment to the SPA is concluded with Edison, noting that there can be no certainty that an agreement on such terms can be reached.

The Algerian assets will continue to be excluded from any formally amended SPA, as previously announced in April 2020.

Based on such indicative terms, Energean would retain the UK subsidiaries.

These include 25 per cent working and economic interest in the 250 mmboe (gross) Glengorm discovery, the largest gas condensate discovery in the Central North Sea in the last decade and a 10 per cent in the Isabella discovery that was announced in March 2020.

Energean agreed to acquire Edison Exploration & Production (Edison E&P) from Edison for an initial consideration of $750 million back in July 2019.

Edison E&P’s portfolio of assets includes producing assets in Egypt, Italy, Algeria, the UK North Sea and Croatia, development assets in Egypt, Italy and Norway and balanced-risk exploration opportunities across the portfolio.

Later, in October 2019, Energean agreed to sell Edison E&P’s UK and Norwegian subsidiaries to Neptune Energy for $250 million of cash, to be adjusted for working capital, with additional cash contingent consideration of up to $30 million.

This agreement was in line with Energean’s strategy to become the largest independent gas-focused E&P company in the Mediterranean, and its intention to dispose of non-core assets.

Come December 2019 and Energean and Edison started talking about the exclusion of Algerian assets from the transaction due to regulatory hurdles.

In April 2020, Energean and Edison agreed to exclude Edison E&P’s Algeria assets from the previously agreed acquisition.

In recognition of the exclusion of the Algerian assets, the two companies agreed on an adjustment to the total consideration of the acquisition of approximately $150 million.