Neptune Energy today announced its financial results for the third quarter of 2023.

Proposed acquisition of Neptune Energy by Eni and Vår Energi on track
•    Proposed transactions on track to complete by the end of Q1 2024.
•    Carve-out of Germany business to existing shareholders to complete by the end of 2023.
•    Separate €200 million Reserve based letter of credit facility secured for Germany business.

Continued improvement in safety, start-up of Seagull and restart of Touat
•    Improved safety performance, with total recordable injury rate of 1.63 per million hours worked.
•    Q3 production of 139.1 kboepd, reflecting higher output from Adorf (Germany) and Snøhvit (Norway). 
•    Start-up of Seagull (UK) and restart of Touat (Algeria) in Q4. FY 2023 production guidance revised to ~145 kboepd.

Significant medium to longer-term growth opportunities in upstream and CCS
•    Material gas discovery at Geng North (Indonesia), potential new production hub in Kutei Basin.
•    Near field exploration delivering success with a discovery at Mulder (Norway), follows Rhone (Netherlands) discovery in Q2.
•    Awarded Trudvang CCS licence in Norway, pursuing ~300 million tonnes of net CO2 storage capacity in Northern Europe.

Strong financial performance in Q3, continued low leverage
•    Q3 2023 EBITDAX of $641.9 million, underlying operating profit of $508.5 million, opex of $12.7/boe.
•    YTD post-tax operating cash flow of $1,022.5 million, YTD adjusted development capex of $259.9 million. 
•    Low leverage, with net debt to EBITDAX of 0.35 times at 30 September 2023. Cash taxes of $1.400.1 million paid YTD.

FY 2023 cash flow guidance reiterated, lowered for capex
•    FY 2023 post-tax cash flow guidance of ~$1.4 billion and cash taxes of ~$1.9 billion reiterated.
•    Capex guidance lowered to ~$350 million, exploration and pre-development spend revised to <$200 million.
•    Carbon intensity guidance lowered to <8 kg CO2/boe, well below industry peers.

Neptune Energy’s Chief Executive Officer, Pete Jones, said: 
“Neptune delivered further growth in the third quarter, with increasing production and the start-up of the Seagull project in the UK. With the restart of Touat in Algeria, we expect production to increase further in the fourth quarter and into next year.

“We have continued to build on strong foundations, with material discoveries in Indonesia and Norway, which follow a discovery in the Netherlands in the second quarter. With the award of a CCS licence in Norway, we are also building a CCS development pipeline of scale in Northern Europe, which positions us well for the future.”

Proposed acquisition of Neptune Energy Group Limited by Eni and Neptune Energy Norge by Vår Energi

On 23 June 2023, the Group announced that Eni International BV (Eni) signed a sale and purchase agreement (SPA) to acquire all the shares of Neptune Energy Group Limited (NEGL), the ultimate holding company of Neptune Energy Group Midco Limited (Midco, or the Company), with Vår Energi ASA (Vår Energi) simultaneously signing an inter-conditional sale and purchase agreement to acquire Neptune Energy Norge AS (Norway) from Neptune Energy Group Holdings Limited, a wholly owned subsidiary of the Company. The two SPAs have an aggregate enterprise value of $4.9 billion subject to customary adjustments. Completion of the acquisitions is conditional upon, among other things, the receipt of necessary regulatory and government approvals. Neptune’s business in Germany is not included in the Eni acquisition and consequently will be carved-out of the Neptune Group to a company owned and operated by the existing ultimate NEGL shareholders before the completion of the Eni acquisition. The Germany carve-out is a condition of the Eni acquisition.

Management has concluded that the Eni, Vår Energi and Germany carve-out transactions are highly probable and are expected to be completed by the end of the first quarter 2024. As the Company is disposing of its Norway and Germany businesses, in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, they have met all the criteria to be classified as assets held for sale and are accounted for as discontinued operations in the Group’s condensed consolidated financial statements as at 30 September 2023, with comparative analysis. The Eni SPA relates to the acquisition of shares of NEGL, therefore all other assets of Midco Group are treated as continuing operations.

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