Page 10 - Euroil Week 14 2020

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Energean to exclude Algerian assets from Edison E&P deal
ALGERIA
The deal covers North Sea assets as well.
UK-LISTED Energean Oil & Gas has agreed to exclude Algerian assets from the deal that will see it take control of a subsidiary of Italy’s Edison.
In a statement dated April 3, Energean explained that it had joined with Edison in amending the sale and purchase agreement (SPA) for Edison Exploration & Production that the companies signed in July 2019. The amendments serve to exclude Edison E&P’s minority stake in Reggane Nord, a natural gas field in south-western Algeria, from the SPA, it said. They also reduce the total sum that Ener- gean will pay for Edison E&P by $150mn, it added.
The parties agreed to make these changes because they were not able to secure approval from the Algerian government for this part of the acquisition, the statement said. According to previous reports, Algiers began raising questions about Reggane Nord last year, when it invited Edison to discuss the SPA with representatives of Sonatrach, the national oil company (NOC) and stressed that the transaction could not go for- ward without the authorisation of the countries
where Edison E&P is operating.
The Algerian government’s action is hardly
unprecedented. Last year, Sonatrach exercised its right to pre-empt a deal between Total (France) and Occidental Petroleum (US) for Hassi Berkine and other Algerian assets previously owned by Anadarko Petroleum (US).
Currently, Edison E&P has a minority 11.25% stake in the Reggane Nord field. The remaining equity in the site is divided between Sonatrach, the operator, with 49%; Repsol (Spain), with 29.25%, and Wintershall Dea (Germany), with 19.5%.
Energean said on April 2 that it hoped to wrap up its acquisition of Edison E&P “as soon as is possible in 2020, subject to the approval of its shareholders and the other relevant gov- ernments.” It added: “Thereafter, Energean’s agreement for the sale of Edison E&P’s UK and Norwegian subsidiaries to Neptune [UK] for a consideration of $250mn plus contingent consideration of up to $30mn (as previously announced) will be completed as soon as rea- sonably practicable.” ™
Centrica puts Spirit sale on hold
UK
Spirit is expected to take a $123mn hit as a result of the downturn.
UK energy group Centrica has put the sale of its upstream business Spirit Energy on hold because of the coronavirus (COVID-19) pandemic and its impact on markets.
Centrica, which is also the owner of gas and electricity supplier British Gas, began hunting for a buyer for Spirit last year, as part of efforts to reduce its debts and sharpen its focus on low- er-carbon energy. It owns a 69% stake in the North Sea producer, while investors led by Ger- many’s Stadtwerke Muenchen Group have 31%.
Centrica said on April 2 it had been due to receive initial bids for Spirit at the end of March but had “taken the decision to pause the process until financial and commodity markets have settled.” But it said it would continue to “pursue the divestment” of its oil and gas exploration and production business, as part of a “strategic shift towards the customer.”
Spirit is expected to take a GBP100mn ($123mn) hit as a result of the downturn,
Centrica warned. It said it had cut the producers’ planned capital expenditure this year by around the same amount, to GBP400mn, and had iden- tified “further cost savings.”
The aim is to keep Spirit cash flow neutral in 2020 or better, Centrica said.
Centrica’s overall upstream capex has been brought down to GBP600mn, compared with an earlier plan of GBP800mn. It has also can- celled the payment of GBP204mn in dividends from its profits last year, as well as management bonuses.
Centrica said it was starting to see an uptick in energy demand from its residential custom- ers in the UK as a result of more people work- ing at home because of lockdown. However, it is experiencing a bigger reduction in demand from business customers as sites temporarily close. The company also warned that it anticipated more bad debts to arise as households come under financial strain. ™
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