Kerogen is pleased to announce that it has entered into a Sale and Purchase Agreement with our listed joint venture partner and project operator Energean plc (“Energean”) for the sale of our 30% shareholding in Energean Israel Limited (“EISL”). The transaction is conditional upon Energean shareholder, regulatory and other customary approvals with completion expected end Q1 2021. Upon completion, Energean will own 100% of EISL’s share capital.
The total fixed consideration to be received is between $380 million and $405 million depending on the timing of payment of the deferred consideration. This represents a gross MoIC* of 3.0x to 3.2x. This total consideration includes Kerogen retaining some ongoing participation through $50 million of convertible loan notes. Including around $340 million in net debt, the enterprise value of the transaction is around $720-$745 million or $3.29-$3.40 EV / 2P boe.
Key transaction terms:
Divestment of Kerogen’s 30% shareholding in EISL for a total consideration of between $380 million and $405 million (the “Total Consideration”)
The Total Consideration includes the following elements:
A payment of $175 million on completion
Deferred consideration of between $125 million and $150 million depending on the timing of payment
$150 million is payable shortly after Practical Completion of the Karish project, currently forecast for early 2022; or
$125 million if paid on or before 31 March 2021, and increasing by $2.5 million each month thereafter, capped at $150 million
An additional $30 million of deferred cash consideration, payable on 31 December 2022
$50 million of convertible loan notes which have a maturity date of 29 December 2023, a strike price of GBP 9.50 per share and a zero-coupon rate
Since our initial investment in EISL in late 2016, key milestones have been successfully met, in line with or above our stated investment thesis. These included initial gas offtake sales, significant debt and equity financings leading to FID of the Karish development in March 2018, the successful discovery of Karish North, and the increase in gas offtake to 7.4 bcm per annum (vs. 4.2 bcm per annum at FID) to in essence fully utilise the FPSO capacity.
We believe this transaction represents an attractive outcome for LPs, enabling the successful value creation to date to be captured, while also mitigating against the remaining project execution steps and follow-on capital requirements.
Jason Cheng, Managing Partner and CEO of Kerogen Capital, commented:
“We deeply value the partnership formed with Energean over the recent years, where together, we have seen substantial progress made in advancing the Karish development and expanding the overall resource base. During this process, we have also found Israel to be a favourable jurisdiction for energy investing.
“We see this transaction as accretive for both Kerogen and Energean. For Kerogen, it enables the successful value creation to date to be captured, with some upside participation through the convertible notes. For Energean, this represents a unique opportunity to consolidate ownership of its flagship asset. We wish Energean every success going forward in delivering this project of national significance.”
Mathios Rigas, Chief Executive Officer of Energean, commented:
“The acquisition represents a unique opportunity, given our existing, unrivalled understanding of the assets. It allows us to consolidate our interests in Israel and is supportive of our ambition to be the leading independent, gas-producer in the Mediterranean.
I would like to thank Kerogen for their support and involvement in the Karish development over the last four years. Together, we will have delivered a project that will provide diversity and security of gas supply to Israel, whilst also helping to remove significant amounts of CO2 annually from Israel’s emissions by enabling the switch from coal to natural gas.”
* Gross multiple on invested capital, before deductions for taxes
Pandion Energy partners in significant oil discovery in the Norwegian Sea
Pandion Energy AS (Pandion Energy) holds a 20 per cent interest in the Slagugle discovery in production license 891 in the Norwegian Sea. Based on preliminary resource estimates this is the largest discovery announced on the Norwegian Continental Shelf in 2020.
The wildcat well 6507/5-10 S is located about 23 kilometers north of the Heidrun field in the Haltenbank area, in the central part of the Norwegian Sea.
Preliminary estimates place the size of the discovery between 12 and 32 million standard cubic meters (Sm³) of recoverable oil equivalent, or about 75 to 200 million barrels oil equivalent.
The well encountered a total oil column of 270 metre in the Åre Formation and Grey Beds. Sandstone layers of 90 meters were encountered within the oil column with generally very good reservoir properties.
Pandion Energy, together with operator ConocoPhillips Scandinavia AS, will assess the results of the discovery together with other nearby prospects to determine the future appraisal and potential development solutions.
VP of Exploration and Appraisal at Pandion Energy, Bente Flakstad Vold, comments:
“We are proud to take part in the largest discovery in Norway this year. This illustrates the value creation potential in the team’s ability to make quick decisions based on a multidisciplinary work methodology. In light of the knowledge gathered from the discovery well, we see an exciting resource upside in both the discovery itself and other parts of the license. We now look forward to continuing our good cooperation with ConocoPhillips and contribute to realizing the full value potential in PL 891.”
Pandion Energy acquired its 20 per cent interest in the production license in July 2019 from operator ConocoPhillips, which holds the remaining 80 per cent.
CEO of Pandion Energy, Jan Christian Ellefsen, adds:
“The Slagugle discovery is a prime example of our exploration strategy targeting opportunities close to existing infrastructure with focus on prospects with material upsides. This is truly a great Christmas present and demonstrates the significant remaining resource potential on the NCS.”
The Slagugle well is the third discovery that Pandion Energy announces in 2020. In March, the company made an oil and gas discovery near the Balder field, in production license 820 S. The licensees are currently planning an appraisal campaign of this Iving discovery in 2021. In November, a minor gas discovery was announced in production license 263 D/E in the Norwegian Sea.
French and swedish team up to optimize serial production of concrete floaters
Ideol and Bygging Uddemann (BYUM) combine their world leading and fully complementary knowhows and signed a formal collaboration agreement aiming at further guaranteeing the on-time and on-budget delivery of Ideol’s concrete floaters for offshore wind, building on existing and proven construction methods.
Ideol, a recognized leader in floating offshore wind, and BYUM, a reputable solution provider for serial production of concrete structures, have both a demonstrated track-record of collaborating with major international construction and EPCI companies, each time aiming to ensure the highest levels of local content in the construction process.
At a moment where commercial-scale floating wind is fast accelerating and where solid delivery reliability is more than ever expected by developers and financiers alike, Ideol and BYUM are hard at work furthering their past and present joint efforts optimizing an Ideol-specific gantry slipforming solution that will be easily implementable by all the leading construction companies across the globe. Particular attention will be paid to meet the same levels of on-time, on-budget delivery achieved by global leaders using BYUM’s solutions on hundreds of emblematic infrastructure projects representing well over 3000 floating concrete structures to date.
Paul de la Guérivière, CEO of IDEOL:
“Developers and financiers require strong evidence of on-time and on-budget delivery before committing the billions required to build and operate offshore wind assets. This collaboration will enable us to offer such reliability for one of the preferred serial construction methods our teams have identified and optimized to meet tomorrow’s project needs. We are very pleased to team up with Bygging Uddemann, another world leader in his field that has recognized the tremendous potential of floating offshore wind and of Ideol’s unique high-local content and highly competitive solution.”
Henrik Magnusson, CEO of Bygging-Uddemann:
“When we studied the numbers of floating offshore wind to be constructed within the next 10-15 years, and the option of making these floating structures in concrete, we realized a new potential application for our established and well proven Gantry Slipform production set-up. The perfect match came around when IDEOL presented their patented “Damping Pool”® concrete solution. The scale and size of their concrete floater design fits perfectly with our Gantry Slipform set-up. As strategic partners, with our combined international experience and knowhow, we are very confident that we have the best on-time and on-budget package available on the market.”
MHI Vestas and Total, new partners of IDEOL on EOLMED project
MHI Vestas and Total formally announced their involvement in the EOLMED project this week. These internationally recognized leaders and the project developer QAIR have agreed to combine their respective know-how’s and efforts to successfully develop and execute this 30MW pilot project.
Paul de la Guérivière (Ideol’s CEO) indicated that “IDEOL is looking forward to collaborate with such powerhouses who both have explicitly expressed their global ambitions in terms of floating offshore wind. Having access to Total’s solid offshore expertise and MHIV’s 10MW turbine will undoubtedly contribute to IDEOL’s already unique return on experience and overall efforts to reduce the cost of floating offshore wind per MW installed.”
Pandion Energy swaps license interests with ConocoPhillips
Pandion Energy AS (Pandion Energy) has entered into an agreement with ConocoPhillips Skandinavia AS (ConocoPhillips) to swap half of its 20 per cent interest in PL 1047 in the North Sea in exchange for ConocoPhillips’ 20 percent interest in PL 938, containing the Calypso prospect. PL 938 is located in the prolific Haltenbanken area in the Norwegian Sea in block 6407/8, just north of the Bauge and Hyme fields.
PL 938 was awarded in the 2017 APA round and is operated by Neptune Energy Norge AS (60 per cent) with ConocoPhillips (20 per cent before swap) and Vår Energi AS (20 per cent) as partners. An exploration well is planned to be drilled in the license in 2021 or 2022.
PL 1047 is operated by Aker BP ASA (40 percent) with Concedo ASA (20 percent), ConocoPhillips (20 percent before swap) and Pandion Energy (20 percent before swap) as partners. The license is located in the North Sea, adjacent to the Martin Linge field.
CEO of Pandion Energy, Jan Christian Ellefsen, says in a comment: “With this transaction we commit to our fourth exploration well in the Norwegian Sea, reflecting our optimistic view on the remaining resource potential in this prolific part of the Norwegian continental shelf. Together with ongoing and planned wells in PL 263 D & E (Appolonia), PL 891 (Slagugle) and PL 929 (Ofelia), we now have a portfolio of four exploration wells, all close to existing infrastructure.”
The transaction is subject to customary conditions for completion, including approval by the Norwegian Ministry of Petroleum and Energy.
On 25 September, OKEA ASA announced an agreement with Neptune Energy Norge AS for the acquisition of a 30 per cent interest in PL 938. Neptune Energy Norge AS will retain a 30 per cent interest and remain operator of the license.
Industry leaders sign floating offshore wind strategic partnership and develop new product
IDEOL, an internationally recognized leader and pioneer in floating offshore wind, and BRIDON-BEKAERT ROPES GROUP (BBRG), the world’s premier supplier of mission-critical advanced cables and ropes, have signed a strategic partnership aiming at developing a new industry-transforming synthetic mooring solution to meet the fast accelerating floating offshore wind market’s cost-reduction, capacity and lead-time expectations.
This partnership will combine IDEOL’s pioneering implementation and unique return on experience of permanent synthetic mooring solutions on floating offshore wind turbines and BBRG’s extensive expertise in developing innovative mooring products while taking full advantage of BBRG’s historic presence and production capabilities in Scotland in light of the ScotWind upcoming lease tenders and future floating offshore wind farms off the coast of Scotland.
Paul de la Guérivière, CEO of IDEOL, stated that “ Mooring solutions and offshore installation have a significant impact on a project’s CAPEX and OPEX and it is imperative for IDEOL to leverage its pioneering efforts with synthetic mooring and further reduce the LCOE of floating wind. Collaborating with Bridon-Bekaert is another great example of IDEOL teaming up with internationally recognized industry leaders capable of providing local employment and offering local value creation. In light of our commitment to offer the highest level of local content in Scotland, we are particularly happy with this partnership.”
John Churchfield, CTO of Bridon-Bekaert Ropes Group, added that “Bridon-Bekaert has a long tradition of manufacturing both synthetic and steel mooring lines for the offshore oil and gas industry. Since our day 1 interaction with Ideol, we realized that applying existing oil & gas cable technology leads to unnecessary high system cost. Today, we are proud to be at a point where we can convert all our cumulated application insights into the development of a custom rope concept fit for the specific operating environment of floating wind.”
As a reminder, IDEOL recently teamed up with Elicio, a leading offshore wind farm developer and operator in the Belgian North Sea, and BayWa r.e. a leading global renewable energy business, to submit proposals for the ScotWind tender launched by Crown Estate Scotland with the aim to maximize the local supply chain development in Scotland. The partnership between IDEOL and BBRG is a perfect illustration of such commitment, combining the development of a new product in partnership with the supply chain and building on existing manufacturing capacities in Scotland.
BayWa r.e., Elicio and Ideol join forces to submit a bid for the ScotWind tender
BayWa r.e., a leading global renewable energy business with a strong presence in Scotland that includes more than 75 employees and 890 MW of onshore wind projects under management, has signed an exclusive agreement to join the existing consortium of Ideol and Elicio to prepare a joint bid for the ScotWind tender recently launched by Crown Estate Scotland.
Paul de la Guérivière, CEO of Ideol, stated that “With this consortium, we bring together a unique array of corporate and individual capability; we believe that our respective track-records and experience of project delivery in offshore wind, wind project development in Scotland and locally constructible floating wind expertise render our joint efforts particularly credible and we are confident we can demonstrate clear and significant positive local economic impacts.”
Ideol brings a full integrated team of more than 50 experts to the table and benefits from the unique return on experience of two full-scale floating wind turbines operating in France and Japan since 2018, as well as a 30 MW pre-commercial project in the final consenting phase (EolMed / France). Several commercial-scale projects centered around Ideol’s highly competitive and locally built Damping Pool® technology are currently under development across the globe.
Alain Janssens, CEO of Elicio, added that “The combined and very complementary know-how of our three major companies will undoubtedly contribute to a competitive and risk-managed delivery of projects with a uniquely high local footprint.”
Elicio, with its dynamic and experienced team, has been active in the development of offshore wind projects for more than a decade and owns significant shareholdings in the Belgian offshore wind projects Norther (370MW), Rentel (309 MW) and SeaMade (487,2MW). The company brings experience in offshore wind development, construction and asset management, and is also an operator of more than 32 onshore wind farms in Europe.
Matthias Taft, CEO of BayWa r.e., noted that “We are delighted to join forces with Elicio and Ideol, and to jointly drive forward innovation in the Scottish offshore wind sector. Our commitment to growing in the Scottish onshore wind market is clear after our first decade of project realisation. We now look forward to moving into Scottish offshore waters in the next decade and creating further jobs and value for the local supply chain.”
BayWa r.e. is a global renewable energy developer, distributor and energy solutions provider that is part of the dynamic BayWa Group, which generated a turnover of €17.1 billion and an operating profit of €188.4 million in 2019. BayWa r.e. has installed more than 3 GW of wind and solar projects worldwide, is the operator of a further 8.3 GW and its development portfolio includes +12 GW globally. It has been operating in the UK renewable energy sector since 2010, and now employs 138 professionals across the UK, 77 of whom are based in Scotland.
Karish pipe laying and subsea systems installation completed – Karish Development c. 80% physically completed
Energean plc is pleased to announce the completion of a key milestone in the Karish and Tanin Development project, offshore Israel.
Energean’s partner, TechnipFMC, has successfully completed on time the laying of the Gas Sales Pipeline and the main deep water installations of the subsea production systems.
The pipelay vessel, Solitaire, completed the core installation of a 30’’ and 24’’ pipeline of 90.3 km length, at depths of up to 1,700 metres. The full pipeline installation, including a significant Tie In Manifold structure (TIM-Water Depth 72m) and the pre-commissioning program, is expected to be completed in 4Q 2020, well within the project schedule.
The pipeline was laid at an average rate, excluding the beach pull, of 4,578 meters per day which represents a world-class performance by TechnipFMC.
The construction support vessel, Normand Cutter, completed the installation of the production manifold and subsea isolation valve foundations and structures. The Installation of the three sets of risers (2×10” and 1×16”) that will connect the three producing wells to the FPSO and then to the Gas Sales Pipeline is expected to commence in 4Q 2020 and be completed in 1Q 2021.
More than 400 personnel have worked on these offshore operations, during which zero Lost Time Injuries occurred. The overall physical progress of the Karish Development project now stands at c. 80% complete.
On behalf of Energean, Vincent Reboul Salze, Project Director – Karish EPCIC, stated: We are very satisfied with the current installation performance on the subsea scope until now. The East Med in spring has proven to be a favorable environment and the pipelay performance has been remarkable on all aspects.
IDEOL – French and Japanese Leaders Team Up to Develop Commercial Scale Floating Offshore Wind Projects
JERA (Japan’s largest utility company), ADEME INVESTISSEMENT (a 100% French State-owned investment company aiming at financing innovative infrastructure projects) and IDEOL (a global leader in floating offshore wind) have agreed on the key terms for the establishment of an investment vehicle dedicated to the financing of the development phase of at least 2 GW of projects using IDEOL’s patented Damping Pool® technology.
Upcoming tenders for commercial-scale floating offshore wind farms in Scotland and France as well as an increasing number of initiatives in promising markets across the globe such as – but not limited to – Japan and the US do confirm the acceleration of floating wind as well as its legitimate place in the global energy mix; in particular for the few market-ready technologies demonstrating a proven and bankable track-record such as IDEOL’s.
In order to take full advantage of such unique pioneering opportunities, JERA, ADEME INVESTISSEMENT and IDEOL intend to join forces by establishing an investment vehicle to finance the development phase of several floating offshore wind projects across the globe during the next 5 years, each time centered around IDEOL’s high-local content and highly competitive technology.
Paul de la Guérivière (CEO of IDEOL) comments: “This new milestone for IDEOL confirms the market-readiness of our technology and shows the relevance of our unique business model as project co-developer and co-EPCI contractor based on our technical excellence. We are particularly happy and honored to team up with JERA and ADEME INVESTISSEMENT, leading voices in two of the most strategic and pioneering markets for floating offshore wind that are Japan and France.”
Satoshi Yajima (Executive Officer of JERA’s Business Development Department) comments: “JERA is enchanted to support the most promising floating foundation on the market and to be a part of its future inevitable success. We are positively assured by IDEOL’s high local content technology and we envision commercial scale projects around the globe through this partnership.”
Arnaud Leroy (CEO of ADEME, itself President of ADEME Investissement) comments: “We do believe that floating offshore wind is on its way to confirm its potential and become a substantial contributor to achieving future climate goals. This partnership aims at financing first commercial scale projects and at supporting IDEOL’s technology as both will contribute to accelerate the competitiveness of floating offshore wind.”
Pandion Energy approves the Hod development project
The Board of Directors of Pandion Energy has today approved sanctioning of the Hod development project. The project was originally scheduled for approval in March but was put on hold due to the outbreak of the COVID-19 pandemic and subsequent collapse in global demand for oil.
On Monday 8 June, the Norwegian Government and the three largest opposition parties agreed on temporary changes to the Petroleum Tax Act in support of the oil and gas industry. Hod is the first project to be launched as a direct consequence of these changes.
Jan Christian Ellefsen, Chief Executive Officer of Pandion Energy: “The board’s approval to move forward with the Hod development in the current market environment has been made possible by the temporary changes to the Petroleum Tax Act. For Pandion Energy, equal treatment of companies within and outside tax position, through negative instalment tax for the latter group, has been a decisive factor. We now look forward to the execution phase together with the operator Aker BP, replicating the successful Valhall Flank West project.”
The Hod development project unlocks approx. 40 million barrels of oil equivalents and the field is expected to generate more than NOK 6 billion of tax revenues during its lifetime. Including ripple effects, the project is estimated to create around 5 000 man-years of employment during the execution phase. With power from shore via the Valhall field, Hod also adds to Norway’s growing portfolio of oil and gas producers with ultra-low CO2 emissions.