Energean plc, the gas producer focused on the Mediterranean, issues an update on its acquisition of Edison E&P and revised group guidance.

Further to its announcement on 19 May 2020, Energean is pleased to announce that it has entered into further amended terms for its acquisition of Edison E&P following which, inter alia, the Norwegian subsidiary will be formally excluded from the transaction perimeter. Combined with the previously announced exclusion of the Algerian asset, $466 million of total reductions to the original consideration1 have now been agreed. Had completion occurred on 31 May 2020, the net consideration payable under the acquisition agreement, as now amended, would have been $178 million.

Highlights

Revised terms

· The gross consideration for the transaction is now $284 million, which compares to the original sum of $750 million.

· The combined amendments to the original Sale and Purchase Agreement ("SPA") will, inter alia, result in a $466 million reduction to the gross consideration1 . This includes:

i) $155 million reduction relating to the exclusion of the Algerian asset from the transaction perimeter;

ii) $200 million reduction relating to exclusion of the Norwegian subsidiary from the transaction perimeter; and

iii) $111 million of additional reductions relating to the macro environment.

· Under the amended SPA, the net consideration which would have been payable had completion occurred on -31 May 2020 (which would have taken into account 17 months of business results since the locked-box date of the transaction), would have been $178 million. Energean does not expect this number to change materially before actual completion.

· The UK North Sea subsidiaries, which includes interests in the large Glengorm and Isabella gas-condensate discoveries, will now be retained within the perimeter of the transaction, further supplementing the growth potential of the enlarged group.

· The $100 million Cassiopea contingent payment will now vary between $0 and $100 million, depending on future Italian gas prices at the point in time at which first gas production is delivered from the field.

The path to closing

· A $220 million Reserve Based Lending facility has been signed with ING, Natixis and Deutsche Bank and has replaced the acquisition bridge facility that was put in place on 3 July 2019.

· Publication of the Shareholder Circular and Prospectus is expected later today, subject to FCA approvals, and the General Meeting to approve the transaction has been scheduled for 20 July 2020.

· Grant of the outstanding formal government approvals and completion of the carve-outs of the Algerian assets and Norwegian subsidiary is expected in the next few months.

· Energean is working to complete the transaction as soon as possible in 2H 2020.

Updated guidance for the combined group, post completion of the Edison E&P acquisition

· The Energean group will have working interest 2P reserves plus 2C resources of more than 800 million barrels of oil equivalent ("mmboe"). 72% of this is gas, approximately 96 billion cubic metres ("bcm"), of which - approximately 85 bcm - will be sold under long-term gas pricing contracts that largely insulate the group's revenues from global commodity price fluctuations.

· 2020 pro forma production guidance is 44.5 - 51.5 thousand barrels of oil equivalent per day ("kboed").

· 2020 pro forma capital expenditure guidance has been further reduced to $760 - 780 million from $840 million. This decrease is despite the inclusion of $25 - 30 million of capital expenditure expected on the UK North Sea assets and, therefore, reflects a further $85 - 110 million reduction to underlying capital expenditure guidance.

 Mathios Rigas, Chief Executive, Energean commented:
"We are pleased to have agreed revised terms for our acquisition of Edison E&P, which will now exclude the Algerian assets and Norwegian subsidiary, and for which we have agreed $466 million of total reductions to the original consideration. I look forward to completing the transaction, which I believe represents excellent value for our shareholders and also enhances our material, gas-focused platform for value creation in the Eastern Mediterranean. Upon completion, our core focus, alongside the Karish project, will be integrating our teams and portfolios, which will further secure our long-term, resilient cash flow profile and option-rich portfolio.

"Following completion, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenues against oil price volatility. We will continue to own and operate the majority of our asset base, and are well-funded for all of our projects.

"Our financial and operational positioning will ensure that we can continue to grow the business but also respond quickly and appropriately to changes in the macro environment, if needed, to protect our business and our shareholders."