UK-based Neptune Energy has agreed to acquire a 70 per cent stake in French utility Engie’s exploration and production business for an aggregate value of €4.7 billion ($5.1 billion), including €1.1 billion in decommissioning liabilities.

Neptune Energy is a UK-based company backed by funds advised by The Carlyle Group and CVC Capital Partners, and a sovereign investor, dedicated to investing in upstream oil and gas activities. Based on this offer, Engie enters into exclusive negotiations with Neptune Energy. This represents a major step in the implementation of Engie’s transformation plan, designed notably to reduce the Group’s carbon footprint and exposure to merchant commodity prices.

The proposed transaction is expected to translate into a €2.4 billion reduction in Engie’s consolidated net financial debt at closing (expected by early Q1 2018), not accounting for provisions.

“This intended transaction is in line with Engie’s strategy to be leader of the energy transition in the world, notably by focusing on low carbon generation and reducing our exposure to commodity prices,” said Isabelle Kocher, Engie chief executive officer.

“After the closing of this transaction, regulated and contracted activities will represent more than 85% of Engie’s EBITDA, thus enabling us to already achieve the objective set for 2018 and to improve our risk profile. This important milestone is also a testimony to the attractiveness of the EPI subsidiary and to the industry-wide recognition of the expertise of its employees. We believe that Neptune Energy is the best potential buyer to secure the future of the EPI development platform and its employees.”

Judith Hartmann, Engie executive vice president, chief financial officer said: “One year after the announcement of Engie’s transformation plan, this project highlights the significant progress made towards the implementation of our €15 billion portfolio rotation program: we are ahead of schedule since 70 per cent of the disposals have been signed or closed in favourable conditions. While allowing the Group to reduce its exposure to merchant commodity prices, the envisaged transaction is expected to strengthen Engie’s balance sheet.”

Neptune Energy would become the sole owner of EPI. Neptune Energy is led by Sam Laidlaw, the former CEO of Centrica plc. Neptune Energy’s ambition is to further develop its exploration and production activities through EPI, through organic growth and by actively pursuing high quality investment opportunities in the North Sea, North Africa and South-East Asia regions. – TradeArabia News Service