Energean acquires Edison E&P
The deal expands Energean’s footprint in the Mediterranean, giving it assets in gas-rich Egypt and Algeria for the first time
Energean has expanded fast, from a small private start-up firm in Greece in 2007, to become a major East Med upstream player. It is developing the Karish and Tanin gas fields offshore Israel, with first gas scheduled to be delivered to power firms in the country in Q1 2021. Energean has commissioned its own floating production storage offloading facility—the first to operate in the East Med. It will operate 56 miles (90km) off the Israeli coast.
This latest move consolidates its position in a major way. The London-based company is acquiring Edison E&P and its subsidiaries for $750mn, with an additional consideration of $100mn contingent on the commissioning of the Cassiopea gas project in Italy. Edison E&P, according to a company statement, owns a portfolio of around 90 licences in nine countries in the Mediterranean and northern Europe, corresponding to approximately 49,000bl/d as at end-2018.
This means that Energean's footprint will expand considerably from its current areas of operations (Greece, Israel, Montenegro) to incorporate significant new acreage-notably in Egypt, the leading producer of natural gas in the region. Edison owns three production leases and six onshore and offshore exploration licenses. Energean will be keen to join the list of international oil companies making significant gas discoveries in Egyptian blocks.
Energean's CEO Mathios Rigas said entry into Egypt "is a very important move. We will be in a very strong position in a country that is delivering more gas than any other. We can't afford not to be there." Overall, he adds, the acquisition of Edison E&P diversifies the company into "a multi-country, multi-asset, full-cycle E&P company with scale, material cash flows, significant growth and portfolio optionality-at a very, very good price".
While Energean is listed in London, its operations base remains in Greece. Rigas said in 2018 that he was prepared to look at business options "anywhere we can fly to in three hours from Athens. A classic mistake that companies our size make is to spread out to areas they know nothing about."
In acquiring Edison, Energean appears to be pushing the bounds of the CEO's strategy for the first time, with the company acquiring Edison licences in the North Sea. But Rigas describes these as "non-core assets. We'll find another home for them. Others are better than us in the North Sea. The Mediterranean is our strength, it's the area we know very well."