NEO Energy buying JX Nippon’s UK assets for $1.7 billion

UK-based and North Sea-focused E&P company NEO Energy is moving forward with its expansion and adding more assets to its portfolio as it has signed an agreement to acquire 100 per cent of the share capital of JX Nippon Exploration and Production (U.K.) Limited (JX UK) for about $1.7 billion.

NEO announced the deal last Friday, revealing that JX UK holds non-operated interests in multiple producing fields and associated infrastructure in the UK North Sea including a 20 per cent interest in the Mariner field and an 18 per cent interest in the Culzean field. However, the transaction excludes JX UK’s interests in the Andrew Area.

The transaction is subject to approvals from the relevant authorities and regulatory consents.

JX Nippon has been working for a while now to sell its oil and gas assets in the UK North Sea. In a separate statement on Friday, JX UK said that the purchase price was based on the enterprise value of $1.655 billion as of 31 March 2021, after adjustment for debt, working capital, etc.

NEO Energy, on the other hand, has been collecting the UK North Sea assets as evident through its previous deals with TotalEnergies, ExxonMobil and Zennor Petroleum.

The deals with TotalEnergies and Zennor have already been completed. However, the one with ExxonMobil is being looked into by the UK’s regulator. In October 2021, the OGA opened an investigation into the proposed sale, which includes 13 producing fields, along with Elgin Franklin, amid concerns the sale to NEO was not progressing as quickly as expected.

When it comes to JX Nippon, the transaction is part of its ongoing global portfolio management strategy to strengthen its upstream portfolio by selling projects that are no longer critical to the business.

Hiroshi Hosoi, JX President and CEO said: “JX is part of the ENEOS Group and is committed to the Group’s “Long Term Vision for 2040”, which includes contributing to the development of a low carbon society.

“In line with this Long Term Vision, we have been investing in various sustainable projects in Vietnam, Malaysia, Australia and the USA, including the Petra Nova CCUS project, one of the largest carbon capture projects in the USA. This transaction is another step towards the group’s Long Term Vision as we continue to contribute to the development of a low carbon society.”

In recent NEO Energy-related news, the company achieved the first gas from its Finlaggan field development, a tieback to the Britannia platform in the UK North Sea. NEO took over the Finlaggan field through its acquisition of Zennor Petroleum.