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Energean expands East Med footprint with Edison deal
Energean’s acquisition of Edison’s assets is its most ambitious deal to date, raising both its pro le and expectations while lling the gap until rst gas from Karish in 2021.
eASt med
WHAt:
Energean has agreed
to buy Edison’s oil and gas assets in a deal that will make the Greek rm a major player in the Mediterranean upstream.
WHy:
It holds stakes in the highly prospective Karish and Tanin gas elds off Israel, but has lacked signi cant producing assets.
WHAt next:
Energean has
been preparing the groundwork to allow production offshore Israel to commence in 2021 and the Edison assets will be expected to bring immediate returns to cover development and infrastructure expenses.
GrEEK independent Energean has agreed a deal to acquire the oil and gas assets of EDF’s Italian subsidiary Edison E&P. Announced last week, the deal will start at $750mn, with Energean pay- ing a further $100mn once gas production from Italy’s o shore Cassiopea eld begins in 2022.
An o cial statement from Energean said the rst instalment would be nanced through a short-term $600mn loan facility and up to $265 million of equity nancing that was completed on June 4, with Morgan Stanley, Stifel Nicolaus, Peel Hunt and rBC acting on the deal and the share placing.
e acquisition of the assets, which comprise reserves of 248 million barrels of oil equivalent (boe), is a signi cant statement of intent.
Adding assets
e move strengthens Energean’s position as a key player in the Eastern Mediterranean.
Prior to the transaction, the company held a total of 347mn boe of reserves, with 297mn boe o shore Israel and 50mn boe in its native Greece.
Its main focus is on ongoing work to achieve rst gas from the Karish eld o shore Israel by early 2021. A competent persons report (CPr) published in August certi ed 62 bn cubic metres (bcm) of 2P reserves at Karish and nearby Tanin and left 5.7 bcm in the contingent category. Energean picked up ve nearby licences in the
north of Israel’s Exclusive Economic Zone (EEZ) in 2017 following the country’s rst international o shore bid round.
The CPr put gross prospective resources across the rm’s Israeli acreage at 212 bcm of gas and 101mn barrels of oil, with the results state- ment revealing that 3D seismic acquisition had begun during Q4 2018 at blocks 23 and 31.
Meanwhile, the Edison acquisition includes assets in Algeria, Croatia, Egypt, Greece, Italy, Norway and the UK with reserves of 292mn boe, more than 75% of which are gas.
These will have an immediate impact on Energean’s bottom line, with Edison’s produc- tion generating $434mn last year compared with Energean’s $52.4mn.
According to material published alongside the deal announcement, Energean “expects pro- forma production of over 140,000 boepd in 2021 and up to 200,000 boepd once the Israeli elds reach full capacity”.
Edison has also been the prime proponent of the estimated $7bn East Med Pipeline pro- ject, which seeks to pipe gas from the region via Cyprus and Greece to Italy, a distance of 2,000 km. However, while Tel Aviv remains nominally committed to the project, doubts about whether the pipeline will ever be built prevail and men- tion of the conduit was notable by its absence in the M&A announcement.
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w w w . N E W S B A S E . c o m Week 27 09•July•2019