In addition to the previously excluded Algerian assets, Energean and Edison have further changed their deal for Energean's acquisition of Edison E&P's assets to also exclude the Norwegian subsidiary.

Following the latest revisions of the previously announced acquisition, Energean has negotiated a total of $466 million of discounts for its acquisition of Edison E&P, the headline cost of which has been reduced to $284 million from an initial $750 million.

To remind, Energean agreed to acquire Edison Exploration & Production from Edison in July 2019 for an initial consideration of $750 million.

Energean then in October agreed to sell Edison E&P's UK and Norwegian subsidiaries to Neptune Energy.

Neptune's acquisition had been contingent on the closing of Energean's acquisition of Edison E&P.

However, Energean and Edison in April 2020 agreed to exclude Edison E&P's Algeria assets from the previously agreed acquisition.

This was due to certain difficulties encountered in obtaining the consent of the Algerian authorities in respect of the Edison E&P assets located in Algeria.

To further complicate the matter, Neptune last May decided to abandon its plan to acquire Edison E&P's UK and Norwegian subsidiaries from Energean and Energean started working on plans to include Edison E&P's UK subsidiaries and exclude the Norwegian ones from the deal.

Revised plans
In an update on Monday, Energean said it has entered into further amended terms for its acquisition of Edison E&P following which, inter alia, the Norwegian subsidiary will be formally excluded from the transaction perimeter.

Combined with the previously announced exclusion of the Algerian asset, $466 million of total reductions to the original consideration have now been agreed.

Had completion occurred on 31 May 2020, the net consideration payable under the acquisition agreement, as now amended, would have been $178 million.

Mathios Rigas, Energean Chief Executive, Energean commented: “Upon completion, our core focus, alongside the Karish project, will be integrating our teams and portfolios, which will further secure our long-term, resilient cash flow profile and option-rich portfolio.

“Following completion, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenues against oil price volatility”.

As a result of the adjustments, the gross consideration for the transaction between Energean and Edison has been reduced to $284 million from an original enterprise value of $750 million.

Inclusion of UK North Sea assets
Following the withdrawal of Neptune Energy from its agreement to acquire the UK North Sea and Norwegian subsidiaries in May 2020, Energean will now retain the UK subsidiaries within the perimeter of the transaction.

The UK portfolio includes a 25 per cent interest in the Glengorm discovery and a 10 per cent interest in the Isabella discovery, announced in 2019 and 2020, respectively.

Glengorm is one of the biggest discoveries in the UK North Sea in the last decade and contained an estimated 250 million barrels of oil equivalent (gross) based on operator estimates.

A two-well appraisal programme is scheduled to start in 4Q 2020 / 1Q 2021 and could represent an attractive source of resource upside for the enlarged group's portfolio.

An appraisal programme is also expected on the Isabella discovery in a similar timeframe.

Financing
On 20 June 2020, Energean signed a $220 million Reserve Based Lending facility (RBL) with ING, Natixis, and Deutsche Bank.

The RBL has replaced the outstanding $255 million acquisition bridge facility.

The acquisition bridge facility was reduced from the original $600 million facility on 20 May 2020 in order to match the approximate size of the RBL. The RBL has a tenor of six years.