Neptune to buy Engie's EPI stake

Neptune Energy signed a firm US$5.1 billion (€4.7 billion) offer with Engie for its 70% stake of Exploration & Production International (EPI).

Image from Engie.

The binding offer includes nearly $1.2 billion (€1.1 billion) in decommissioning liabilities deconsolidated from Engie’s balance sheet.

“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” Engie said in a statement.

The deal will see Neptune Energy become the sole owner of EPI, and is expected to close by early Q1 2018.

Neptune Energy, led by former Centrica CEO Sam Laidlaw, says it has set its sights 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.

According to Engie, the deal is part of the company’s strategy by focusing on low carbon generation and reducing our exposure to commodity prices.

“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. We believe that Neptune Energy is the best potential buyer to secure the future of the EPI development platform and its employees,” says Isabelle Kocher, Engie CEO.

“One year after the announcement of Engie’s transformation plan, this project highlights the significant progress made towards the implementation of our €15 billion portfolio rotation program: we are ahead of schedule since 70% of the disposals have been signed or closed in favorable conditions. While allowing the Group to reduce its exposure to merchant commodity prices, the envisaged transaction is expected to strengthen Engie’s balance sheet,” says Judith Hartmann, Engie executive VP, CFO.

EPI is headquartered in France and has upstream oil and gas interests in the UK, Norway, Germany, the Netherlands, Indonesia, Algeria and Egypt.

As of 31 December 2016, EPI had booked 2P reserves of 672 MMboe and its equity production was 148,000 boe/d in 2016.  As of March 2017, EPI has 1622 employees.