Mediterranean Sea-focused oil and gas firm Energean has entered into an agreement to buy Kerogen’s 30% shareholding in Energean Israel, which would result in Energean owning a 100% stake in the company.
Energean Israel holds a 100% working interest in the Karish and Tanin leases, offshore Israel, and the company is working to develop the Karish field which is expected to go online in late 2021.
A recent independent Competent Persons Report by DeGolyer and MacNaughton ("D&M") certified gross 2P reserves of 98.2 Bcm (3.5 Tcf) of gas and 99.6 million barrels ("MMbbls") of liquids across the Karish, Karish North, and Tanin fields representing approximately 729 million barrels of oil equivalent.
Energean said Wednesday it would pay between $380 million and $405 million for Kerogen's 30 percent stake.
The deal includes an up-front payment of $175 million, deferred cash consideration of between $155 million and $180 million, post-first gas from the Karish project, and $50 million of convertible loan notes. The Energean Power FPSO, to be used for production at the Karish field, is expected to sail away from Singapore to Israel in 3Q 2021 and to deliver first gas in 4Q 2021
Energean said the acquisition adds 2P reserves of 29.5 billion cubic meters (“Bcm”) of gas and 30 million barrels of liquids, representing approximately 219 million barrels of oil equivalent (“MMboe”) in total, to the company.
The enlarged Energean group will have 2P reserves of 974 MMboe (80% gas) and a working interest production trajectory to more than 200 thousand barrels of oil equivalent per day (“kboed”) (approximately 80% gas), once Karish and Karish North are producing at plateau rates, the company said.
The acquisition is subject to shareholder, regulatory and other customary approvals. Energean expects to close the acquisition in 1Q 2021.
"The Energean board of directors (“the Board”) has unanimously approved the Acquisition and will recommend it to Energean shareholders in the upcoming circular, which Energean expects to publish in late January / early February 2021," the company said.
Mathios Rigas, Chief Executive Officer of Energean, commented: “The acquisition represents a unique opportunity, given our existing, unrivaled understanding of the assets and the fact that the position significantly enhances Energean’s cash flow, whilst generating no incremental G&A costs. It allows us to consolidate our interests in Israel, enabling us to further generate long-term value by capitalizing on the production growth and upside potential of our acreage offshore Israel; and is supportive of our ambition to be the leading independent, gas-producer in the Mediterranean."
“Having now closed the Edison acquisition, Energean has 2P reserves of almost 1 billion barrels of oil equivalent, 80% of which is gas; and we are now at a key transition point, in which these reserves will be turned into long-term cash flows that will support our medium-term ambition to pay a meaningful, sustainable dividend to our shareholders."
“I would like to thank Kerogen for their support and involvement in the Karish development over the last four years. Together, we will have delivered a project that will provide diversity and security of gas supply to Israel, whilst also helping to remove significant amounts of CO2 annually from Israel’s emissions by enabling the switch from coal to natural gas.”