MILAN/LONDON (Reuters) - Italy’s Edison has agreed to reduce the value of the sale of its oil and gas operations to Energean by two thirds to $284 million after dropping the Algerian and Norwegian assets from the deal.
Mediterranean-focused Energean last year agreed to buy the oil and gas operations for up to $850 million, but the parties agreed to revise the deal because of the amendments and a weaker outlook for oil and gas prices following the coronavirus crisis.
A unit of French state-controlled utility EDF, Edison said it would retain control of Edison Norge, which controls the group’s upstream activities in Norway, until market conditions “allow a full valuation of its assets”.
Energean entered talks with Edison to exclude the Norwegian subsidiary from the deal after Energean’s plan to immediately sell on Edison’s North Sea assets to Neptune Energy fell through.
Earlier this year, the two companies agreed to exclude Edison’s Algerian assets, worth $155 million, from the deal, citing a lack of authorisation from Algeria’s Ministry of Energy.
Following the Edison deal, which is expected to close by the end of the year, natural gas-focused Energean will look for more acquisitions, CEO Mathios Rigas told Reuters.
“We will look for more opportunities, and in this environment, we see many companies struggling and majors looking to sell high-quality assets,” Rigas said.
It plans to keep the British North Sea assets from the Edison portfolio for now, he added.
Energean has access to more than $1 billion in credit and debt to complete the development of the Karish and Tanin gas fields offshore Israel, where production is due to start early in 2021.
Edison said the deal confirmed its strategy of exiting the upstream business and focusing on renewable energy.
Reporting by Giulio Piovaccari in Milan and Ron Bousso in London; editing by Jason Neely and Barbara Lewis