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Neptune Energy proposes to buy Engie's EPI for $3.9bn

EBR Staff Writer Published 12 May 2017

Neptune Energy has proposed to acquire a 70% stake in Engie's exploration and production business for $3.9bn.

Engie's Exploration & Production International (EPI) is headquartered in France. It has upstream oil and gas interests in the UK, Norway, Germany, the Netherlands, Indonesia, Algeria and Egypt

Both the companies have signed an exclusivity agreement, under which a full consultation process will be undertaken with employee representatives in all relevant jurisdictions to outline the proposed plans for the business going forward. 

Based in the UK, Neptune Energy is backed by private equities The Carlyle Group and CVC Capital Partners. It focuses on investing in large oil and gas assets.

Neptune Energy’s plans to further develop its exploration and production activities through EPI by actively carrying out investment opportunities in the North Sea, North Africa and South-East Asia regions.

The Engie exploration and production business carries out operations is nearly 60 oil and gas fields including the large Touat gas development currently in progress in Algeria, in which the French utility would retain a stake of 30%.

Neptune Energy executive chairman Sam Laidlaw said: “EPI is a strong business with a balanced portfolio of long-life assets with low operating costs in diversified geographies across the entire E&P value chain. We look forward to working with the EPI leadership team to grow the business organically and through acquisitions. 

“We intend to capitalise on the quality of EPI’s people and the company’s global asset portfolio, to generate long term sustained value for employees, the countries in which we are privileged to operate and for our investors.”

For Engie, the divestiture is likely to reduce its consolidated net financial debt by €2.4bn.

Engie CEO Isabelle Kocher said that the proposed transaction aligns with the company’s strategy to be a global leader of energy transition by focusing mainly on low carbon generation and lowering exposure to commodity prices.

Kocher added: “After the closing of this transaction, regulated and contracted activities will represent more than 85% of Engie’s EBITDA, thus enabling us to already achieve the objective set for 2018 and to improve our risk profile.

“This important milestone is also a testimony to the attractiveness of the EPI subsidiary and to the industry-wide recognition of the expertise of its employees.”

Following the acquisition, Neptune Energy is set to become the sole owner of EPI with an objective to further grow its exploration and production operations through the latter.

Based on relevant consultation processes and customary regulatory approvals, the proposed acquisition of EPI is expected to be completed in the first quarter of next year.

Image: Engie's F3 complex. Photo: courtesy of ENGIE E&P.