Engie confirms takeover offer for E&P business

French energy company Engie has confirmed it has received an offer from Neptune Energy for its stake in its oil and gas exploration and production business.

The confirmation follows an earlier report by Reuters which said the deal over Engie’s E&P business was imminent.

Neptune, an investment firm established in 2015 by an ex-Centrica boss Sam Laidlaw, has offered to buy Engie’s 70% interest in Exploration & Production International (“EPI”) for an aggregate value of €4.7 billion (at 100%, including €1.1 billion in decommissioning liabilities deconsolidated from ENGIE’s balance sheet).

Based on the offer, Engie has now entered into exclusive negotiations with Neptune Energy. The completion of the transaction is expected in the first quarter of 2018.

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, the company said.

“This intended transaction is in line with ENGIE’s strategy to be leader of the energy transition in the world, notably by focusing on low carbon generation and reducing our exposure to commodity prices…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. We believe that Neptune Energy is the best potential buyer to secure the future of the EPI development platform and its employees”, said Isabelle Kocher, ENGIE Chief Executive Officer.

According to Engie’s statement on Thursday, 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.

Engie’s subsidiary 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,” Engie said.

 

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