Energean bids farewell to Egypt, Italy, and Croatia as assets fetch $945 million

London-based oil and gas player Energean has set the divestment of its portfolio in Egypt, Italy, and Croatia in motion for an enterprise value (EV) of up to $945 million, of which $820 million is firm. This will enable the firm to pursue gas-weighted portfolio growth in the Mediterranean and the wider Europe, Middle East, and Africa (EMEA) region.

Thanks to a binding agreement for the sale of its portfolio in Egypt, Italy, and Croatia to an entity controlled by Carlyle International Energy Partners, Energean will realize more than a threefold return on investment since the portfolio was acquired for $284 million in 2020. The completion of the transaction is expected by year-end 2024, subject to customary regulatory and antitrust approvals.

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.”

As the sale removes over 60% of its decommissioning liabilities and improves free cash flow generation in the short to medium term, the UK-headquartered player plans to rationalize its portfolio and focus on its gas-weighted, gas-development strategy, underpinned by the Karish field in Israel and the recent farm-in to the Anchois field in Morocco.

Bob Maguire, Co-Head of Carlyle, remarked: “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.”

Furthermore, Energean is determined to maintain and enlarge its footprint in the Mediterranean while also looking beyond this to the wider EMEA region, particularly where there is long-term policy support for gas and displacement of coal. In addition, the company will focus on creating a carbon storage hub in Greece and the wider Mediterranean region via its EnEarth subsidiary.

Following the divestment of assets in Egypt, Italy, and Croatia, the firm’s Scope 1 and 2 emissions intensity is expected to go down by around 40% to about 5 kg CO2e/boe, accelerating the firm’s 2035 target of 4-6 kg CO2e/boe by ten years. As the economic effective date of the transaction is December 31, 2023, the gross assets attributable were $1.67 billion at the time while total liabilities were $1.27 billion, of which $516 million was provision for decommissioning.

“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,” highlighted Rigas.