UK-based energy giant Energean has agreed to sell its assets in Egypt, Italy, and Croatia to private equity fund Carlyle for up to $945 million.
The gas exploration and production company disclosed that the cash would be used to repay a $450 million corporate bond and pay out a $200 million special dividend.
The Cassiopea gas field in Italy and Abu Qir gas production hub in Egypt are part of the assets that will be sold in the deal.
Following the announcement, the company’s shares rose 3%.
Energean will now focus on its primary gas-producing facility offshore Israel and its exploration activities in Morocco. The company will also expand to the wider Europe, Middle East and Africa region post-sale.
“This sale enables Energean to rationalise the portfolio and focus on its gas-weighted, gas-development strategy, underpinned by the Karish Field in Israel and recent farm-in to the Anchois field in Morocco,” Energean said.
Energean CEO Mathios Rigas noted that the sale was part of the company’s strategy to optimise its portfolio by reducing more than 60% of the group’s decommissioning liabilities, divesting mature assets and promoting free cash flow.
“This deal represents an exciting new chapter for Energean. Today we have realized a significant return on the investment made when we acquired this portfolio over four years ago. The transaction delivers on our strategy and Energean’s ability to maximize value for our shareholders. It maintains our highly disciplined approach to capital allocation, as demonstrated by the accretive transaction metrics, coupled with an anticipated special dividend,” Rigas said.
Rigas also emphasised that the sale would not increase Energean’s dependence on Israel, which already accounts for 80% of the multinational’s business.
The CEO went on to say that the proceeds of the sale would aid in the funding of the company’s flagship development in Israel, a new discovery in Morocco, and a carbon capture and storage (CCS) project in Greece.
“Our focus will now be to create enhanced value from our Israel assets, and evaluate new opportunities that fit Energean’s key business drivers: paying a reliable dividend, deleveraging, growth, and our commitment to net zero,” he remarked.
Why Carlyle wants in on Egypt
Meanwhile, Carlyle disclosed that it would expand operations in the Mediterranean oil and gas sector through this deal.
The private equity group plans to spin off the assets into a new company which will be chaired by former BP CEO Tony Hayward. The company will seek further acquisitions from Carlyle in the Mediterranean.
“This acquisition provides a strong platform to build a standalone regional champion in the Mediterranean, one of the fastest growing natural gas markets in the world,” Hayward, chairman designate of the new company, said in a statement.
Energean produced 123,000 barrels of oil equivalent per day (boed) in 2023 and expected production in Egypt to rise to 29,000-31,000 boed in 2024 from around 25,000 boed. Carlyle is looking to significantly increase these numbers.
The private equity firm said it would increase production from the acquired assets to 50,000 barrels of oil equivalent per day, up from 34,000 boe/d last year.
While other multinationals are moving away from upstream projects due to climate concerns, Carlyle insists that it can reduce the carbon intensity of its operations, thereby increasing asset value.
It is for this reason that the firm has consistently acquired or invested in several energy companies such as Neptune Energy, Assala Energy and SierraCol. Banking on the success of these investments, Carlyle is confident in its ability to establish a standalone, leading E&P company in the Mediterranean, through organic growth initiatives and Mergers and Acquisitions.
