Energean Plc · LSE:ENOG
Energean — Merger or Acquisition (July 2019)
41 slides from Energean's merger presentation, Jul 4, 2019
Slide 1: Acquisition of Edison E&P & $265 MM Equity Placing
Acquisition of Edison E&P & $265 MM Equity Placing 1
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) THIS PRESENTATION AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR RELEASE, PUBLICATION, REPRODUCTION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, HONG KONG, THE REPUBLIC OF SOUTH AFRI
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) This presentation is being distributed only to and is directed only at persons in member states of the European Economic Area ("EEA") who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) including any relevant implement
Slide 4: Creating Value Through the Acquisition of a Complementary Portfolio
Creating Value Through the Acquisition of a Complementary Portfolio Mediterranean-Focused Gas-Weighted Diversified Scale Attractive Metrics Energean is acquiring EDF’s E&P portfolio held under Edison SPA 2018 Key • 2P Reserves: 292 mmboe (76% gas) Operational • Production: 69 kboe/d (80% gas)(2) and
Slide 5: Edison E&P Portfolio Overview
Edison E&P Portfolio Overview 292 mmboe W.I. 2P More than 75% c. 100 E&P Licenses c. 280 Employees $434 MM 2018 EBITDA Reserves Operated Production UK Norway • 7 non-operated licenses (both producing • 2 recently FID approved development and exploration) projects in Norway (first production in • 4 m
Slide 6: Creating a Material Mediterranean-Focused Player
Creating a Material Mediterranean-Focused Player… (1) Growth story, focused on developing Immediate cash flows & EBITDAX with new reserves incremental growth opportunities Reserves (mmboe) W.I. 2P 347 292 Production (kboe/d) 4 69 Revenue ($ MM) 90 621 EBITDAX ($ MM) 52 434 ($ MM) OCF 63 302 ($ MM) C
Slide 7: With a Material, More Balanced and Sizeable Portfolio
...With a Material, More Balanced and Sizeable Portfolio Standalone 2P Reserves Breakdown Combined 2P Reserves Breakdown Greece 14% (50 mmboe) Israel 86% Italy 13% (297 mmboe) (85 mmboe) Combined Israel 46% Egypt 24% (297 mmboe) (152 mmboe) North Sea 5% Italy 29% (30 mmboe) Croatia <1% (24 mmboe) Al
Slide 8: Enhancing Scale and Diversification of Combined Group
Enhancing Scale and Diversification of Combined Group Clear Trajectory to 200 kboe/d(1) (2) Enhancing Scale and Diversification of Combined Group Combined 2019 - 2025 Production Profile by Country (kboe/d) Edison E&P Investment Profile (2) 250 ($ MM) 2019-22 2023-25 2026-Expiry Capex c. 1,250 c. 150
Slide 9: Karish & Tanin Update: On Track to Deliver First Gas in Q1 2021
Karish & Tanin Update: On Track to Deliver First Gas in Q1 2021 FID (Q1 2018) First Gas On Track FPSO Workstream 2018 2019 2020 2021 Hull and Hull Sailaway Hull and FPSO Topsides First Hull Keel Hookup of Hull First Steel Cut Topsides from Cosco Topsides Sailaway from Steel Cut Laying Risers Q4 Cons
Slide 10: Enhanced Free Cash Flow Generation Potential in the 2020s
Enhanced Free Cash Flow Generation Potential in the 2020s Combined 2019E – 2025E Unlevered Free Cash Flow Profile (1) 2019E 2020E 2021E 2022E 2023E 2024E 2025E Energean OCF Energean Capex Edison OCF Edison Capex Cumulative Unlevered FCF Cumulative Energean Standalone Unlevered FCF Sources: Company I
Slide 11: Consideration and Financing Structure
Consideration and Financing Structure Consideration and Funding Equity Placing • Total consideration − $850 MM ‒ $750 MM up front cash consideration • Equity placing of $265 MM ‒ $100 MM contingent cash consideration on Cassiopea first gas • ABB announced 4 July 2019 (expected 2022, funded through f
Slide 12: Attractive Valuation with Significant Upside Potential
Attractive Valuation with Significant Upside Potential Material Potential Upside to Headline Figures 2.6 1.7x c.3 yrs. 18% 2018 Payback on 10yr estimated AV/2P unlevered IRR (1) AV/EBITDAX Production (1) Accretive Acquisition Metrics AV / 2018 EBITDAX (3) AV / 2P (x) ($/boe) 40.0 30,0 12,0 Significa
Slide 13: Enhancing Newsflow Potential
Enhancing Newsflow Potential Development and Exploration Timeline (1) Country Asset Activity H2 2019E H1 2020E H2 2020E 2021E/22E Exploration 1 – 1.5 Tcf GIIP (Karish North) Additional Israeli Wells 6.3 Tcf and 101 mmbbls (gross prospective resources) Exploration targeting Gal (Royee) (2) 71 mmboe (
Slide 14: Creating Value Through Application of our Core Principles
Creating Value Through Application of our Core Principles Mediterranean-Focused Gas-Weighted Diversified Scale Attractive Metrics Acquisition of highly complementary full cycle Energean W.I. 2P Reserves Growth portfolio enhances and diversifies Energean’s mmboe 639 existing assets Maintains stra
Slide 15: Transaction Timing and Next Steps
Transaction Timing and Next Steps 4 July 19 Transaction Signing and Announcement 8 July 19 Admission of New Shares H2 19 Regulatory Approvals and Partner Consents H2 19 Reserve Based Facility and Corporate Debt Takeout of Bridge Loan H2 19 Planned Disposal of Non-Core Assets Q4 19 Publication of Cir
Slide 16: Asset Overview
Asset Overview
Slide 17: Egypt: Optimising Cash Flow Generation at Abu Qir
Egypt: Optimising Cash Flow Generation at Abu Qir Transaction Drivers • 100% operated position in one of Egypt’s largest producing gas condensate fields • Shallow water, low unit opex • Long-term, well understood production with material reserves position NORTH ABU QIR NAQ-PI NAQ-PIII • Stable comme
Slide 18: Egypt: Developing Reserves at NEA
Egypt: Developing Reserves at NEA A Platform for Growth NORTH IDKU • 100% operated position • Gas-condensate development generating possible synergies through NORTH EL AMYRIA leveraging existing infrastructure at Abu Qir • FID expected late 2019 (Edison’s control, first gas expected in 2021) NORTH I
Slide 19: Egypt: Potential Exploration Upside
Egypt: Potential Exploration Upside Near Term Drilling Targets • North Thekah Offshore ― Edison E&P 85%, Ratio Oil 15% (subject to finalisation of farm down) ― Exploration well expected to spud Q4 2019 2.9 Billion boe net un-risked ― Primary target the Ameeq prospect, P50 7.4 Tcf GIIP (gross), a 4-w
Slide 20: Egypt: Why Invest Now?
Egypt: Why Invest Now? Outstanding Arrears Owed to IOCs in Egypt Edison E&P Overdue Receivables in Egypt $ Bn $ MM 4,7 4,2 4,0 324 2,4 221 200 144 147 1,2 0 2014 2015 2016 2017 2018 2019E 2014 2015 2016 2017 2018 Ministry Pledge to Fully Repay Receivables by YE 2019 IOCs’ arrears had totalled $6.3
Slide 21: Italy: Stable, Low-Cost Production
Italy: Stable, Low-Cost Production Transaction Drivers CLARA NORTH WEST W.I. (%) 49 • Second largest operator of oil and gas assets in Operator ENI Italy ’19 Prod (kboe/d) 3 • Stable, low-cost production Reserves (mmboe) 6 • Material reserves • Long-life country portfolio SARAGO ― 13-year reserve li
Slide 22: Italy: Developing Cassiopea
Italy: Developing Cassiopea Transaction Drivers Sicilia Licata Gela • One of the largest greenfield developments in Italy, medium-to-long term growth 45 – 50m WD Export sealine 14” – 60 km RaGe Cassiopea wells 1 & 2 • 40% W.I. (ENI 60%, Op.) 586m WD Condotta Description • FID early 2019 Cassiopea we
Slide 23: Italy: Decommissioning
Italy: Decommissioning Total Italy undiscounted decommissioning spend through life-of-field of c. $540 MM (of which c. $100 MM due over the next 10 years)(1) Committed to optimising decommissioning activities and spend 1 • Proactive interaction with local government and regulation bodies to jointl
Slide 24: Rest of the Portfolio – Algeria and Croatia
Rest of the Portfolio – Algeria and Croatia Reggane, Algeria Izabela, Croatia Transaction Drivers Transaction Drivers • 11% W.I. (Repsol 29%, Operator) • 70% W.I. (Edina 30%, Operator) • Large, long-life asset operated by a reputable • Offshore gas asset located in the Croatian Adriatic Sea, interna
Slide 25: Rest of the Portfolio – UK North Sea and Norway
Rest of the Portfolio – UK North Sea and Norway UK North Sea Norway Transaction Drivers Transaction Drivers • Portfolio of mature producing assets managed by • Attractive FID approved development projects in a strong experienced operators, with balanced mix of oil and gas market, with established in
Slide 26: Rest of the Portfolio – Greece and Israel
Rest of the Portfolio – Greece and Israel Greece Israel Transaction Drivers Transaction Drivers • West Patraikos • Working interest: 20% (op.) (Ratio Oil 70%, Israel - Working interest: 50% (Hellenic Petroleum 50% (op.)) Opportunity Energy Resources 10%) - Shallow water block located in the Patraiko
Slide 27: Appendix
Appendix
Slide 28: Edison Portfolio Overview – Egypt
Edison Portfolio Overview – Egypt Abu Qir NEA NORTH IDKU NORTH ABU QIR NAQ-PI NAQ-PIII NORTH EL AMYRIA NAQ-PII NORTH IDKU WAQ-PI ABU QIR AQ-PI AQ-PII Meadia Meadia GasTerminal GasTerminal Abu Qir Overview NEA Overview • Gas and condensate field located in the shallow water of Abu Qir Bay in the Nile
Slide 29: Edison Portfolio Overview – Italy
Edison Portfolio Overview – Italy Cassiopea Other Key Italy Assets (1) CLARA NW CASSIOPEA SARAGO CASSIOPEA_1DIR ARGO_2 ARGO_1 ROSPO MARE Cassiopea Overview Other Key Italy Assets Overview • High growth offshore gas development asset located in the Strait of Assets Vega Rospo Mare Clara NW Sarago Des
Slide 30: Edison Portfolio Overview – Norway
Edison Portfolio Overview – Norway Nova Dvalin NOVA DVALIN PL 880 PL 796 Nova Overview Dvalin Overview • Gas weighted offshore development asset with condensate and NGL • Robust oil development project, with gas and NGL production production, located on the margin between Halten and Donna terraces D
Slide 31: Edison Portfolio Overview – UK
Edison Portfolio Overview – UK Scott & Telford Glengorm GANNET D GANNET G GANNET A CULZEAN SCOTT & TELFORD SCOTT PLATFORM GLENGORM GANNET C GANNET F WEST FRANKLIN FRANKLIN UK Scott & Telford Overview Glengorm Overview Assets Scott Telford • CNOOC announced the largest UKNS gas discovery in 10 years
Slide 32: Edison Portfolio Overview – Other Assets
Edison Portfolio Overview – Other Assets Reggane Izabela IZABELA REGGANE Reggane Overview Izabela Overview • Offshore gas asset located in the Croatian Adriatic Sea, an established • Large, long life gas development operated by a reputable international OECD hydrocarbon basin with favorable fiscal t
Slide 33: Edison 2019E-2025E Production Profile
Edison 2019E-2025E Production Profile (1) By Country (kboe/d) 86% Gas 71% Gas 18% Gas 80 80 12 Egypt Italy UK 60 60 9 40 40 6 20 20 3 0 0 0 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 100% Gas 58% Gas (2) 100% Gas 40 4
Slide 34: Edison 2019E-2025E Operating Cost Profile
Edison 2019E-2025E Operating Cost Profile(1) By Country ($ MM) 80 80 80 Egypt Italy UK 60 60 60 40 40 40 20 20 20 0 0 0 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Vega Rospo Cluster Assets Scott Telford Other Assets C
Slide 35: Edison 2019E-2025E Unit Operating Cost Profile
Edison 2019E-2025E Unit Operating Cost Profile (1) By Country ($/boe) 20 40 100 Egypt Italy UK 15 30 75 Not meaningful due to portfolio 10 20 50 ramp-down 5 10 25 N/M N/M N/M 0 0 0 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2019E 2020E 2021E 2022E 2023E 2024E
Slide 36: Egypt: Key Fiscal Terms
Egypt: Key Fiscal Terms Summary Illustrative Egyptian Concession Structure A percentage of total production will be available to the contractor for reimbursement of expenditures including exploration development and operating costs incurred (“Cost recovery pool”) Development and exploration expe
Slide 37: Italy: Key Fiscal Terms
Italy: Key Fiscal Terms Italy Concession Regime A federal corporation tax (IRES) is levied at a rate of 24% Revenues Deductible expenses to calculate the IRES taxable income include 10% of IRAP Corporation paid Royalties Tax (IRES) Losses may be carried forward to offset up to 80% of IRES taxa
Slide 38: Algeria: Key Fiscal Terms
Algeria: Key Fiscal Terms Reggane SPA Share of Pi = K*a – b where K = 0.939 Investors Total Production Stepped calculation based on the daily production: Pi= 0.939*a-b 1-Pi Daily Production (boepd) a Investor(1) Sonatrach <=20,000 59% 60% 40% A factor 100% >20,0000 and <= 40,000 53% Transportati
Slide 39: Greece / Israel: Key Fiscal Terms
Greece / Israel: Key Fiscal Terms Greece Israel 25% tax rate (20% income tax and 5% regional tax) Corporate Ordinary corporate income tax rate of 23% applies (reduced from 24% in 2018) Tax rate is fixed during the term of the contract (2013 Income Parliament ratification) Tax Corporate Contr
Slide 40: Summary of Certain Key Risks
Summary of Certain Key Risks This Appendix highlights certain key risks and uncertainties associated with the Acquisition, Edison E&P and the Enlarged Group. The risks and uncertainties described in this Appendix are neither exhaustive nor listed in order of importance or likelihood. There may be ad
Slide 41: Summary of Certain Key Risks (Cont'd)
Summary of Certain Key Risks (Cont’d) Summary of certain key risks associated with Edison E&P: 1. Edison E&P had $147 million of overdue receivables due from EGPC at 31 December 2018 out of total EGPC receivables at such date of $241 million (net of a $40 million bad debt provision): Edison E&P has