Neptune Energy has agreed to acquire Edison E&P’s UK and Norwegian assets for $250 million in cash.
The deal is contingent on Energean Oil and Gas completing its acquisition of Edison E&P, announced in July, which is intended to strengthen its Mediterranean natural gas portfolio.
The assets to be acquired by Neptune from Edison E&P include an estimated 30 million BOE of 2P reserves and near-term production close to infrastructure, including:
A 25% interest in the Glengorm gas condensate discovery in the UK central North Sea near Neptune’s operated Seagull project. Glengorm is an additional contingent resource.
A 15% interest in the Nova oil and gas development in the Norwegian North Sea, which is being developed as a subsea tieback to the Neptune-operated Gjoa field. Production is expected in 2021, with estimated net 2P reserves of more than 11 million BOE.
A 10% interest in the Dvalin gas development in the Norwegian North Sea, which is being developed as a subsea tieback to the Heidrun field. Four gas wells are expected to be drilled from the end of 2019, with first gas expected by the end of 2020. Net 2P reserves are estimated at more than 11 million BOE.
Interest in the following fields: Scott 10.5%, Telford 15.7%, Tors 68%, Wenlock 80%, and Markham 3.1%. The fields this year have combined incremental non-operated production of 3,000 BOE/D. Neptune said Tors is “strategically important” to the company-operated Cygnus field because of the shared export route.
A 10% interest in the Isabella licence, upon which an exploration well is expected to spud in the coming weeks.
“This is an important bolt-on acquisition that is in line with our strategy of consolidating our position in key areas with high quality and complementary assets,” said Jim House, Neptune chief executive officer, in a news release. “The assets are an excellent fit with our North Sea portfolio. Nova and Dvalin are expected to add 12,000 BOE/D to our production base over the next 2 years, and Glengorm adds significant potential for the longer term.”
Neptune could pay up to $30 million more in cash contingent on increases in incremental reserves as part of the field development plans for Glengorm or Isabella.
Neptune will take on Edison UK and Norway employees and has agreed to guarantee their terms of employment and severance pay for 18 months from the deal’s completion, which is expected in early 2020.