Energean Oil & Gas plc (LSE: ENOG; TASE: ENOG) is buying Italian company Edison Energy & Production (E&P) for $750 million. Greek company Energean, which owns Israel's offshore Tanin and Karish gas fields, and is traded on the Tel Aviv Stock Exchange (TASE), is buying oil and gas fields in Egypt, Italy, Algeria, Croatia and the UK's North Sea as well as development projects in Egypt, Italy and Norway.
The acquisition will make Energean a more significant player in the growing eastern Mediterranean gas hub, adding a significant presence in Egypt’s offshore basin to its Israeli assets.
In addition to the initial payment of $750 million, Energean will pay an additional $100 million after gas production in Italy's Cassiopea field begins, probably in 2022. Edison will also receive an 8% royalty on profit from future discoveries made by exploration wells in Egypt's offshore North Thekah and North East Hap’y blocks.
Energean said that the acquisition is in line with its strategy of becoming one of the leading Mediterranean companies in the field of natural gas exploration and production. The company said, "The expected deal will strengthen Energean in terms of the company's growth and the range of its assets, exploration opportunities, immediate contribution to cash flow and strategic support for growth of the company and its plan to distribute dividends in the medium term."
According to Energean, the enlarged group will have a total of 639 mmboe of 2P reserves. Edison E&P adds 2018 EBITDAX of $434 million and operating cash flow of $302 million.
Financing will be through a $600 million committed bridge loan facility and up to $265 million of equity financing through the placing announced on Thursday. The debt and equity capital raised will cover both the initial consideration and working capital requirements of the enlarged group.
Energean CEO Mathios Rigas said, "The acquisition of Edison E&P establishes Energean as the leading independent, gas focused E&P company in the Mediterranean with a mainly operated, low cost, gas weighted portfolio, with the capability, focus and team to prosper in our rapidly changing industry. It will diversify Energean into a multi-country, multi-asset, full-cycle E&P company with scale, material cash flows, significant growth and portfolio optionality."
He added: "Together, our priority is to maximize the economic value of the combined portfolio, whilst retaining as a key priority delivery of Karish and Tanin first gas into Israel in the first quarter of 2021."
Energean's shares were listed on the TASE in October 2018 and have risen 24% since then, giving a market cap of NIS 5.6 billion.
Published by Globes, Israel business news - en.globes.co.il - on July 4, 2019
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