Eni buys British company Neptune Energy (and its gas to diversify from Russia)

Eni and its Norwegian subsidiary Vr announced the acquisition of Neptune Energy Group. It is a UK company focused heavily on Norway and the Netherlands specializing in the exploration and production of hydrocarbons, at competitive rates and with low emissions gas-focused operations in Western Europe, North Africa, Indonesia and Australia, the note said. The San Donato Milanese Group is once again performing growth mergers and acquisitions in markets diversifying supplies. Furthermore, Neptune owns 12% of the Hammerfest liquefaction plant in Norway, and the ability to produce LNG is an asset that has become strategic since, with Russia’s invasion of Ukraine, the flexibility of gas transportation (LNG goes everywhere by ship) , while natural gas only travels in pipelines) which has become a strategic asset.

gas giant

With a strong focus on Norway and the Netherlands, Neptune Energy is a gas giant (74% of its total production), producing around 130,000 barrels of oil per day. In the first quarter of 2023, Neptune produced approximately 142,000 barrels of oil per day, three-quarters of which were gas, and reported revenues of $1.42 billion, profit before tax of $1.05 billion, and net debt of $544 billion.

Descalzi: High quality wallet

Through this process – commented CEO Claudio Descalzi – Eni has acquired a high-quality, low-carbon portfolio, with exceptional integration at a strategic and operational level. We believe that gas is a critical energy source for the global energy transition, and we are committed to increasing our share of natural gas production to 60% by 2030. Neptune will contribute predominantly gas assets to our portfolio. Moreover, the geographical and operational overlap is surprising: Vr Energi, a company in which Eni holds the majority, is increasing in size; It brings greater gas production and additional Ccus (carbon dioxide capture, storage and use, ed.) opportunities in the North Sea; consolidates Eni’s position as the first international company in Algeria, a major supplier of gas to European markets; Increases Eni’s presence off the coast of Indonesia, with supplies for the Bontang LNG plant and for the national markets.

More gas for Europe

The process will add approximately 4 billion cubic meters of gas to European consumers. Descalzi adds that another important aspect of the operation is the lower cost of new supplies and the increase in cash flow that leads to Eni. The nature and challenges of the energy transition require a focused response, and this transaction highlights two particularly important aspects of Eni’s financial strategy: the flexibility and discretion offered by high liquidity and low leverage, and our innovative satellite model that helps access allocated capitals. The memo specifies that portfolio assets in Germany are excluded from the acquisition, while assets in Norway will be acquired by Var Energy.

the goal

Neptune has been targeted by Eni since the end of last year, as it is interested in expanding its business in the natural gas sector, and the process has accelerated in recent days. Reuters reported that exclusive talks between the two companies began in recent weeks. Founded in 2015 by former Centrica CEO Sam Laidlaw, in 2017 Neptune acquired the assets of the French company Engie for €3.6 billion. Neptune ownership also includes private equity firms Carlyle (30.6%) and CVC Capital Partners (20.4%).

Partnership in Indonesia

The two companies already teamed up in 2019 when Eni, through its subsidiary East Sepinggan Limited, sold 20% of the homonymous area off the Indonesian coast to Neptune Energy where the two companies were already partners in Muara Bakau. The completion of this deal with Neptune Energy strengthens cooperation in Indonesia as both companies are involved in various upstream projects, such as the Muara Bakau project which includes the Jangkrik field, in the Kutei Basin, off the coast of East Kalimantan, where Eni operates a joint venture with a 55% stake.

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