NEO Energy and HitecVision have announced the signing of a transaction that puts NEO Energy among the top five oil and gas companies in the UK.
NEO Energy is acquiring a major portfolio of non-operated oil and gas assets in the Central and Northern North Sea from ExxonMobil. Following completion, NEO’s expected proforma 2021 production will be circa 70,000 barrels of oil equivalent per day (boepd), growing organically to more than 80,000 boepd in 2024 through ongoing field developments. NEO is acquiring a substantial, cash generative portfolio that will significantly increase and diversify its producing asset base. Adding close to 40,000 boepd and more than 140 million boe of reserves, it represents a major step towards NEO’s near-term target of producing 120,000 boepd.
The acquisition is an important milestone for NEO, supporting the company’s strategy of being a leading full-cycle E&P company on the UKCS. On completion of the transaction, NEO will have a strong presence in the key hubs in the Central and Northern North Sea, with total reserves and resources of around 300 million boe. The company will have a total of 35 fields both producing and under development.
The agreement is valued at more than USD 1 billion. There may be additional contingent considerations of approximately USD 300 million based on the potential for increases in commodity prices.
The portfolio to be acquired consists of 21 assets, including 14 fields and a number of infrastructure positions. The fields can be divided into the following hubs:
|Area||ExxonMobil interest sold|
|Shearwater area (inc. Fram, Starling, Merganser & Scoter)||44%-72%|
|ETAP (Mirren & Madoes)||21-25%|
The assets include several organic growth opportunities, including ongoing development projects such as the Penguins field, infill wells and life extension opportunities. The total number of employees in NEO at closure of the transaction will be circa 160.
The fields being acquired are operated by some of the largest and most experienced offshore operators in the world including Shell, BP and Total. NEO will become Shell’s largest partner in the UK Central and Northern North Sea.
“This acquisition builds on NEO’s existing North Sea portfolio and towards delivering on our ambition to be a leading producer on the UKCS. NEO is well placed, together with its operating partners, to extract value from this and other opportunities, while at the same time focusing on improved environmental performance.” Russ Alton, CEO of NEO Energy, said.
“HitecVision is a leading investor in the European offshore energy industry with USD 6.7 billion in assets under management. We have built one of Norway’s largest oil and gas companies, through our joint venture with ENI, in Vår Energi. We believe that NEO has the potential to achieve a similar position in the UK sector to that held by Vår Energi in Norway. We will continue to fund NEO’s growth in the UK through more acquisitions and, where appropriate, mergers. This will be the first UK investment for our most recent fund, The North Opportunity Fund, which we closed in March 2020.” John Knight, Senior Partner at HitecVision, added.
NEO will fund the acquisition partly from HitecVision funds and partly from an increase of commitments under its USD 2 billion Reserve Based Lending facility underwritten by BNP Paribas, DNB, ING and Lloyds Bank.
The transaction, which is subject to approvals from the relevant authorities and regulatory consents, is expected to complete by the middle of 2021.
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