Page 8 - EurOil Week 37 2021

EurOil INVESTMENT EurOil

Neptune reportedly eyes

Harbour merger

NORTH SEA NEPTUNE Energy is reportedly considering a sources told Bloomberg earlier that a potential
merger with fellow North Sea player Harbour IPO at Neptune could value the business at more
The tie-up would create Energy, in a tie-up that would establish the larg- than $5bn. This suggests that a combined com-
the largest independent est independent operator in the region with a pany could be worth around $10bn.
operator in the region. market capitalisation as large as $10bn. Neither Neptune nor Harbour have com-
The coronavirus (COVID-19) induced oil mented on the press report, and neither have the
market crash in 2020 and the subsequent recov- banks understood to be involved. But in April,
ery have spurred a flurry of merger and acquisi- Harbour CEO Linda Cook noted that the com-
tion deals, with an estimated $264bn of energy pany was considering potential acquisitions to
industry transactions announced this year alone, enter “at least one more region” offering a sub-
according to Bloomberg data. Some operators stantial resource base.
have exploited the weakened financial state of
less fortunate rivals, while others have banded More to Harbour’s benefit
together to drive down costs in what remains a Harbour would likely gain more from the tie-up,
volatile market. as it would benefit from Neptune’s production
Neptune, part-owned by private equity group growth potential, lower operational spending
Carlyle Group and CVC Capital Partners, is eval- and reduced greenhouse gas emissions (GHGs).
uating a potential merger with Harbour, sources Neptune benefits from a considerably low meth-
told Bloomberg on September 7. It is one of sev- ane intensity of only 0.01%, and a relatively low
eral options the company is considering with the carbon intensity of 6.3 kg of CO2 per boe, largely
assistance of Rothschild, Goldman Sachs and thanks to the fact that many of its platforms are
JPMorgan Chase, the news agency said. Back in electrified.
May it was reported that Neptune was also con- Neptune also has a more gas-weighed port-
sidering an initial public offering (IPO) and a folio, making its business inherently cleaner. Gas
further capitalisation from its shareholders. demand is also expected to have a more robust
Neptune has fields off the coasts of the UK, growth trajectory in the coming years than oil
Norway and the Netherlands, with additional consumption, not to mention the record high gas
activities in Germany, North Africa and South- prices in Europe at present.
east Asia. The company produced 126,200 bar- Both companies could also bring together
rels of oil equivalent per day in the first half of their various low-carbon initiatives. Harbour is a
this year, down from 155,800 boepd a year ear- partner in the Acorn carbon capture and storage
lier. But its output is anticipated to bounce back and blue hydrogen project in Scotland. Acorn
to a full-year average of 130,000-135,000 boepd, will take CO2 from Scottish industry and pipe it
on the back of new project launches. offshore for storage under the North Sea bed. It
In February the company brought the Gjoa would also take natural gas arriving from North
P1 field off Norway on stream, followed by a sec- Sea fields and convert it into hydrogen, while
ond Gjoa tieback, Duva, in August. It also com- using CCS to make it clean.
missioned the Merakes project in Indonesia in Neptune, meanwhile, is developing several
April. CCS and blue hydrogen projects in the UK and
Harbour is already the biggest producer in the Netherland, and is also seeking to gain a foot-
the UK. It was formed earlier this year from hold in the emerging green hydrogen industry.
the merger of North Sea rivals Premier and Neptune and Harbour are generally similar
Chrysaor, making its debut on the London in scale, with comparable rates of production
stock market on April 1. It is on track to produce and virtually identical proven and probable
185,000-195,000 boepd this year, it said in an reserves, estimated at roughly 600mn boe each.
August presentation. Besides its UK business, it But whereas gas accounts for 72% of Neptune’s
also works in Norway, Indonesia, Vietnam, Bra- reserves, it represents only 50% of Harbour’s
zil and Mexico. resource base.
Harbour shares leapt up 7.2% in UK trading Neptune’s operating costs were estimated at
on September 7 on news of the potential merger, $10.6 per boe in the first half of this year, whereas
and closed that day at 2.3% above the previous Harbour’s came in at $15.2. Neptune is also sad-
end of trade, giving the company a market cap- dled with a smaller net debt of $2.04bn, com-
italisation of GBP3.6bn ($4.9bn). Meanwhile, pared with Harbour’s $2.96bn. ™

P8 www. NEWSBASE .com Week 37 16•September•2021