Italian energy giant Eni has inked a sale and purchase agreement to acquire Neptune Energy Group Limited
while the oil major's majority-owned Vår Energi simultaneously signed an inter-conditional sale and purchase
agreement to acquire Neptune's Norwegian business for an aggregate enterprise value of $4.9 billion. The only
part of Neptune's portfolio, which is not included in these transactions is its business in Germany.

According to Eni, it will acquire assets comprising Neptune's entire portfolio other than its operations in Germany
and Norway, as the German operations will be carved out prior to the transaction while the Norwegian operations
– Neptune Energy Norge – will be acquired by Italian giant's 63 per cent owned Vår Energi directly from
Neptune under a separate share purchase agreement. The oil major considers Neptune's portfolio of gas-
oriented assets and operations in Western Europe, North Africa, Indonesia, and Australia to be competitive in
terms of cost and low operational emissions.

Commenting on the transaction, Eni's CEO, Claudio Descalzi, remarked: ''This transaction delivers to Eni a high-
quality and low-carbon intensity portfolio with exceptional strategic and operational complementarity. Eni sees
gas as a critical bridge energy source in the global energy transition and is focused on increasing the share of its
natural gas production to 60 per cent by 2030. Neptune will contribute predominantly gas resources to Eni's
portfolio.

“Moreover, the geographic and operational overlap is striking, adding scale to Eni's majority-owned Vår Energi;
bringing more gas production and CCUS opportunities to the remaining North Sea footprint; building on Eni's
leading position in Algeria – a key supplier to European gas markets; and deepening Eni's presence in offshore
Indonesia, supplying the Bontang LNG plant and domestic markets.”

Furthermore, the Vår transaction is expected to close prior to the Eni transaction with the proceeds from the
Norwegian business sale remaining with the Neptune Global business purchased by the oil major. Under the
terms of the deal, the Neptune Global business will have an enterprise value of approximately $2.6 billion, while
Neptune's Norwegian business will have a value of about $2.3 billion.

The net debt of the Neptune Global business, pro forma for the sale of the firm's Norwegian business, was
around $0.5 billion as of 31 December 2022. While the final net consideration for both transactions will be subject
to customary closing adjustments, it will be paid in cash at completion. Eni says that this acquisition will be
funded through available liquidity.

Moreover, Eni believes that this transaction is “an exceptional fit,” as it complements the oil major's key areas of
geographic focus and supports its objective of increasing the share of natural gas production to 60 per cent while
reaching net-zero emissions (Scope 1+2) from the Upstream business by 2030. It also aligns with the Italian
player's strategy of providing “affordable, secure and low-carbon energy” to society, for which natural gas
remains an important source.

How will Eni benefit from this acquisition?
The Italian energy player sees many benefits in this acquisition, including reported 2P reserves of around 484
million boe – as of 31 December 2022 – of which about 386 million boe are net to the oil major's portfolio, and of
which approximately 80 per cent is natural gas. As a result, the transaction equates to a 2P acquisition cost of
$10.1/boe with significant additional contingent resource upside.

Neptune reported revenues of about $1.22 billion and EBITDAX of around $0.95 billion for the Neptune Global
business for the year ended 31 December 2022. This transaction is going to add around 130 kboed to the Eni
and Vår portfolios. In lieu of this, Eni estimates the transaction will add more than 100 kboed of low-emission
production over 2024-2026, of which more than 70 per cent will be natural gas (compared to 53 per cent for Eni
in 2022), with almost all of that amount capable of supplying OECD markets via pipeline or LNG.

In addition, this acquisition is expected to be immediately accretive to earnings and CFFO per share, as well as
free cashflow positive while being consistent with the 2023-2026 Plan presented in February 2023, especially the
guidance of €1 billion (almost $1.09 billion) net positive contribution from portfolio activities over the period; €37
billion (nearly $40.23 billion) of organic capex over the period; leverage within a 10 per cent to 20 per cent range;
and achieving 2023-26 production CAGR of 3-4 per cent predominantly through organic investment plus the net
impact of inorganic high-grading activities.

As a result, this will enable Eni to integrate new assets that deliver additional value while divesting others as it
restructures and simplifies its portfolio. Moreover, the Italian oil major expects to generate G&A and industrial
synergies to a value of over $0.5 billion, with additional cost synergies, exploration, and development including
more CCS, financial, and midstream value upside potential.

“The nature and challenges of the energy transition require a focused response and in particular this transaction
highlights two important aspects of Eni's financial strategy – the flexibility and optionality that our strong liquidity
and low balance sheet leverage offer; and our innovative satellite model which helps to align and access
dedicated capital,” added Descalzi.

What does this bring to Eni?
The acquisition of Neptune's Global business will expand Eni's portfolio with multiple new assets. In the UK,
Neptune produced 15 kboed in 2022, with most related to gas production from its operated and long-life Cygnus
field, the UK's largest single gas producer. Additionally, Neptune is currently developing the operated Seagull
field which is due to come on stream in 2H 2023. In contrast, Eni produced 44 kboed in the UK during 2022
mainly from the non-operated Elgin Franklin and J-Block.

In the Netherlands, Neptune produced 18 kboed last year and most of it is related to gas production, as Eni
considers Neptune to be the largest producer in the Dutch North Sea since it operates several key offshore hubs
which provide opportunities to efficiently add new reserves and production through infill drill and tie-backs. The
Italian giant does not have E&P operations in the Netherlands but the additional source of gas supply is expected
to improve the geographical and pipe versus LNG diversification of its midstream gas GGP operations.

In Algeria, Neptune operates the Touat field where production is currently suspended but will restart once
upgrades to the processing facilities are complete with plateau production at 100 per cent of over 400 Mscfd (
around 70 kboed). On the other hand, Neptune's production from the Western Desert in Egypt was 3 kboed last
year compared to Eni's 95 kboed in Algeria and 346 kboed in Egypt.

In the context of the war in Ukraine, Algeria has become a key supplier of gas to Europe, thus, Eni expects 2023
production will average more than 120 kboed in the country. In Indonesia, Neptune's production of over 20 kboed
came from the Eni-operated Jangkrik and Merakes fields which supply gas to the Bontang LNG facility and
domestic customers while the oil major's production in 2022 was 62 kboed.

Additionally, Neptune maintains an interest in the Petrel project in the Bonaparte Basin, offshore Australia. While
development options for this project are currently being assessed, Eni says there could be an optionality to
leverage existing infrastructure including its 100 per cent owned Blacktip field which produces and processes gas
offshore for delivery to shore.

Regarding Neptune's Norwegian business, it accounted for 58 kboed in 2022 of low-cost and low-emission
production, of which 57 per cent was gas or LNG. The company's principal assets in the country are Snøhvit,
Njord, Gudrun, Fenja, Duva, Gjøa, and Fram of which Fenja, Duva, and Gjøa are operated.

During 2022, Neptune completed development activities on Njord and Fenja, with both expected to contribute to
production growth this year while future growth is expected to be driven by a number of short-cycle tie-back
opportunities to existing infrastructure.

In contrast, Vår produced 220 kboed in 2022, thus, Eni believes that the combination in Norway brings together
two “high-performing organisations with extensive experience in exploration and project development and
significant opportunities to create additional value while reducing emissions.”

Meanwhile, Neptune's portfolio production in 2022 was comprised of 77 per cent gas with the Scope 1 & 2
carbon intensity of operated production in 2022 being 5.9 kg CO2eq/boe. Aside from gas, which is considered to
be a low-carbon fuel, Neptune is also advancing CCS projects in Norway, the Netherlands, and the UK with
FEED at the L10 project in the Netherlands expected to start this year.

For Eni, CCS is “a key lever” in its decarbonisation strategy targeting a gross capacity of 30 Mtpa by 2030. While
Ravenna CCS is expected to start up in 2024 and HyNet in the UK is advancing as one of two 'Track 1' projects,
the oil major is also working on the Bacton CCS project in the UK, Bahr Essalam in Libya and other projects in
Egypt, Australia, and the UAE.

The closing of this acquisition is subject to a number of customary closing conditions, including the carve-out of
Neptune's operations in Germany, completion of the Vår transaction; and the receipt of other customary
governmental and contractual consents, FDI, and anti-trust clearances. With this in mind, the transaction is
currently expected to close in the first quarter of 2024.

Vår Energi boosts its oil & gas portfolio
In a separate statement, Vår Energi confirmed the agreement to acquire 100 per cent of the shares of Neptune
Energy Norge to accelerate growth and value creation on the Norwegian Continental Shelf (NCS). The company
believes that this transaction will strengthen its position in all existing hub areas. It will be financed through
available liquidity and credit facilities and is expected to strengthen future dividend capacity.

Torger Rød, the CEO of Vår Energi, stated: “Neptune Norway is a perfect fit. It will add production of high-value
barrels and an asset portfolio supporting long-term sustained value creation and underpin our plan to increase
production by more than 50 per cent by end-2025, while significantly reducing unit production cost. The
acquisition will strengthen our position in core areas, support continuous asset optimisation and increase
operatorships while providing attractive early-phase projects and exploration opportunities. We will also bring
together two strong teams to realise our full potential.”

This acquisition brings Vår Energi ownership in 12 producing assets, three of which are operated by Neptune
and seven by Equinor, leading to an increase in operatorship and further strengthening the partnership with
Equinor. The transaction will also add 67 kboepd of daily production for 1Q 2023, around 265 mmboe of 2P
reserves (ASR 2022), and several near- and medium-term growth opportunities with a material gas share in the
portfolio amounting to 62 per cent of production in 1Q 2023.

Based on Vår Energi's statement, the acquisition will enable a pipeline of early-phase projects including Dugong,
Blasto, Echino South, and numerous infrastructure-led exploration (ILX) opportunities around existing hubs. As a
result, the firm expects to realise approximately $300 million in synergies over time, from “a robust development
and exploration portfolio, improved asset utilisation and commercial optimisation of the gas sales strategy.”

In line with this, the combined proforma estimated figures for Vår Energi and Neptune's Norwegian business
show production of 281 kboepd oil in the first quarter of 2023 and year-end 2022 2P reserves of about 1.3 billion
boe. The gas share of proforma reserves was 32 per cent while the proforma estimated emission intensity for
2022 was around 6 kg CO2/boe and the production cost was approximately $12.5 per boe.

The effective date of the transaction will be 1 January 2023, with expected completion in the first quarter of 2024,
subject to customary closing conditions, including regulatory approvals from competition authorities and the
Norwegian Ministry of Petroleum and Energy and the Ministry of Finance.

As Neptune produced 62 per cent gas and LNG, 27 per cent oil and 11 per cent NGLs in Norway during the first
quarter of 2023, around 42 per cent of the production came from operated fields. The 2P reserves at the end of
2022 were 68 per cent gas, 17 per cent oil, 11 per cent NGL, and 4 per cent condensate. Neptune Norway has
participated in seven discoveries since 2019, including Echino South and Blasto, in which Vår Energi is a partner,
and three operated discoveries in Dugong, Hamlet, and Ofelia.

Neptune is actively pursuing low-carbon initiatives in Norway with Gjøa already electrified, Gudrun (Sleipner) set
to be electrified from the fourth quarter of 2023, and Fram (Troll) in the process of establishing power-from-shore.
The PDOs for Njord and Snøhvit electrification were submitted in late 2022 while Neptune's emission intensity for
operated assets was approximately 2.4 kg CO2 per boe during the year.

“Vår Energi and Neptune Norway share the same focus on safety and ESG leadership through low-carbon
barrels and electrification. The acquisition will expand our hub strategy to new areas and key growth assets,
including operatorship of Fenja, Duva, and Gjøa, with significant potential for infill and infrastructure-led (ILX)
activity. We will become a partner in the significant Snøhvit gas field and the Melkøya LNG plant, the only gas
export infrastructure in the Barents Sea. We will also strengthen our partnerships with key NCS stakeholders
across the portfolio, including Equinor,” elaborated Rød.

Neptune keeps its German business
While confirming the deals with Eni and Vår Energi, Neptune Energy disclosed that its business in Germany
would continue to be owned and operated by the ultimate existing shareholders as a standalone group. The
company explains that its board, together with Eni and Vår Energi, believe the proposed combinations will
enhance their technical and financial capabilities to provide energy security and participate in the energy
transition.

Sam Laidlaw, Executive Chairman of Neptune Energy, said: “Since Neptune's formation in 2018, we have
invested in the business and transformed the organisation, resulting in material improvements in safety,
operational performance and cost efficiency. I am incredibly proud of Neptune's achievements over the past five
years – and the hard work and dedication of so many people across our organisation, who, together with our
shareholders, have contributed to the growth and success of the business.

“This transaction offers a new and exciting phase for Neptune, with significant growth opportunities supporting
energy security and the energy transition, which will benefit from Eni's and Vår Energi's larger scale and
available resources.”