Neptune Energy Group €4.7 Billion acquisition of 70% interest in Engie E&P

09/04/2018

Freshfields Bruckhaus Deringer, Levy & Salomão, Bredin Prat and Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga advised on the deal

Neptune Energy finalized the acquisition of ENGIE 70% interest in EPI. Neptune Energy is a UK-based company backed by funds advised by The Carlyle Group and CVC Capital Partners, and a sovereign investor, dedicated to investing in upstream oil and gas activities. Based on this offer, ENGIE enters into exclusive negotiations with Neptune Energy. This represents a major step in the implementation of ENGIE’s transformation plan, designed notably to reduce the Group’s carbon footprint and exposure to merchant commodity prices.

The aggregate value of €4.7 billion1 includes decommissioning liabilities deconsolidated from ENGIE’s balance sheet for €1.1 billion and a deferred consideration derived from contingent payments linked to certain operational milestones for c. €90 million.

The proposed transaction is expected to translate into a €2.4 billion reduction in ENGIE’s consolidated net financial debt at closing (expected by early Q1 2018), not accounting for provisions.

Neptune Energy would become the sole owner of EPI. Neptune Energy is led by Sam Laidlaw, the former CEO of Centrica plc. Neptune Energy’s ambition is to further develop its exploration and production activities through EPI, through organic growth and by actively pursuing high quality investment opportunities in the North Sea, North Africa and South-East Asia regions.

As part of the envisaged transaction, ENGIE would keep a 30% interest in the Touat project in Algeria, which is currently in the development phase. ENGIE remains a major gas player in Algeria through its LNG activity and ENGIE’s experience in Algeria is considered key to bring the first gas to the Touat project. ENGIE is also providing vendor financing to the buyers as part of the envisaged transaction.

EPI is headquartered in France and has upstream oil and gas interests in the United Kingdom, Norway, Germany, the Netherlands, Indonesia, Algeria and Egypt. As of December 31, 2016, EPI had booked 2P reserves of 672 million barrels of oil equivalent (mmboe) and its equity production was 148 thousand barrels of oil equivalent (kboe) per day in 2016. As of March 2017, EPI has 1,622 employees. As part of its social commitment, ENGIE intends to remain in close dialog with the employee representative bodies and employees during the transition period in view of the envisaged transaction. The Group has already agreed with Neptune Energy that there would be no social plan in the next two years on the perimeter that was reorganized as part of the latest EPI transformation plan, and that EPI employees would have access to ENGIE’s internal job market during two years after closing of the envisaged transaction.

The envisaged transaction will be submitted to the relevant employee representative bodies of ENGIE and EPI, and is subject to customary closing conditions, with completion expected by early Q1 2018.

Freshfields Bruckhaus Deringer advised Neptune Energy Group with Samuel Newhouse (Picture), Graham Watson, Tim Wilmot, Charles Hayes and Alan Mason.

In Brazil, Levy & Salomão advised Neptune Energy Group Alexandre Ditzel Faraco, Ana Paula Martinez, Mariana Tavares de Araujo and Marcos Drummond Malvar.

Bredin Prat advised Engie with Patrick Dziewolski, Kate Romain, Yves Rutschmann, Laetitia Tombarello, Samuel Pariente, Pierre-Marie Boya, Valentine Pouyet, Timur Celik, Caroline Combes and Jessica Chartier.

In Brazil, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga advised Engie with Giovani Loss, Nilton Gomes de Mattos Neto and Maria Clara Castro do Egito Coelho.

 

Paolo Bossi | Global Legal Chronicle

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