Eni will acquire Neptune’s Global Business, while Neptune’s German operations will be separated prior to Eni transaction, and Vår will directly acquire Neptune’s Norway Business, under a separate share purchase agreement
Italian energy company Eni, together with Norwegian oil and gas company Vår Energi, has agreed to acquire UK-based offshore oil and gas company Neptune Energy for a total enterprise value of $4.9bn.
Neptune Energy’s Dugong discovery in Norway. (Credit: Neptune Energy)
Established in 2015, Neptune is an independent exploration and production company with a portfolio of gas-oriented operations in Western Europe, North Africa, Indonesia, and Australia.
Under the terms of the agreement, Eni will acquire Neptune’s entire portfolio, excluding its operations in Germany and Norway (Neptune Global Business), which is valued at around $2.6bn.
Vår will directly acquire Neptune’s Norwegian operations (Neptune Norway Business), valued at around $2.3bn, under a separate share purchase agreement.
The Norwegian company will acquire Neptune’s German operations prior to the closing of the Eni transaction, in the first quarter of 2024, subject to certain customary closing conditions.
The conditions include the spin-out of Neptune’s German operations, completion of the Vår transaction and receipt of other customary government and contractual consents.
Eni CEO Claudio Descalzi said: “Eni sees gas as a critical bridge energy source in the global energy transition and is focused on increasing the share of its natural gas production to 60% by 2030. Neptune will contribute predominantly gas resources to Eni’s portfolio.
“Moreover, the geographic and operational overlap is striking, adding scale to Eni’s majority-owned Vår Energi; bringing more gas production and CCUS opportunities to the remaining North Sea footprint; building on Eni’s leading position in Algeria – a key supplier to European gas markets; and deepening Eni’s presence in offshore Indonesia.
“We also expect the added supply to provide further optimisation opportunities for Eni’s GGP operations. Indeed, we see the transaction adding around 4 Bcm of gas supply for European consumers. A critical element of the transaction is also the low-cost supply and accretive cashflow it provides to Eni.”
Vår Energi said that the transaction is in line with its strategy for growth and value creation, and will add scale, diversification, and further strengthen its portfolio.
The assets acquired are complementary to its current portfolio and are highly cash generative with low production costs and limited near-term investments.
Also, the acquisition will strengthen its position in all existing hub areas, said Vår Energi.
Eni said that the transaction complements its areas of geographic focus, and supports its goal of increasing natural gas production share to 60%, and reaching net zero emissions by 2030.
The acquisition is in line with its strategy of providing affordable, secure and low-carbon energy, and is also consistent with its operating and financial framework, said Eni.
Vår Energi intends to finance the transaction through available liquidity and credit facilities, while Eni plans to fund its transaction through available liquid cash.
HSBC served as exclusive financial advisor to Eni, White & Case as legal advisor to Eni, and Ernst & Young as tax and financial due diligence advisor to Eni.
Vår Energi CEO Torger Rød said: “Neptune Norway is a perfect fit. It will add production of high-value barrels and an asset portfolio supporting long-term sustained value creation and underpin our plan to increase production by more than 50% by end-2025, while significantly reducing unit production cost.
“The acquisition will strengthen our position in core areas, support continuous asset optimisation and increase operatorships, while providing attractive early phase projects and exploration opportunities. We will also bring together two strong teams to realise our full potential.”
