Share Issue/Capital Change • Jul 4, 2019
Share Issue/Capital Change
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THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION IN THEM, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA, HONG KONG, SINGAPORE OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.
For immediate release
4 July 2019
London, 4 July 2019 - Energean (LSE: ENOG, TA: אנאג (the oil and gas producer focused on the Mediterranean is pleased to announce that it has entered into a conditional sale and purchase agreement to acquire Edison Exploration & Production S.p.A. ("Edison E&P") from Edison S.p.A. ("Edison") (the "Acquisition") for US\$750 million, to be adjusted for working capital, with additional contingent consideration of US\$100 million payable following first gas from the Cassiopea development (expected 2022), offshore Italy.
Edison E&P's portfolio of assets includes producing assets in Egypt, Italy, Algeria, the UK North Sea and Croatia, development assets in Egypt, Italy and Norway and balanced-risk exploration opportunities across the portfolio. The Edison E&P portfolio adds working interest 2P reserves of 292 mmboe and 2018 net working interest production of 69 kboe/d.
The Acquisition of Edison E&P on attractive metrics is in line with Energean's stated strategy of creating the leading independent, gas-focused E&P company in the Mediterranean. It will significantly increase Energean's scale and diversification by adding a complementary portfolio of accretive development, appraisal and exploration opportunities, whilst immediately contributing EBITDAX and cashflow to support the Enlarged Group's strategic growth and medium term ambition to start paying a dividend.
The Enlarged Group will have a total of 639 mmboe of 2P reserves and will be one of the largest independent E&P companies listed on the London and the Tel Aviv Stock Exchanges.
Edison E&P brings 282 employees, which combined with the existing Energean team, will provide highly skilled and experienced coverage of all key geographies of the combined portfolio.
Gas contributes 76% of Edison E&P's 2P reserves and 80% of its 2018 production, complementing Energean's gas-focused transition fuel growth strategy.
Edison E&P adds 2018 EBITDAX of US\$434 million and Operating Cash Flow of US\$302 million, materially enhancing Energean's current cash flow ahead of Karish and Tanin First Gas. It supplements the long-term profile with sustainable cash flows that are largely shielded from commodity price fluctuations due to the gas sales agreements in place and supports the Company's medium-term ambition to pay a dividend.
Edison E&P complements and augments Energean's growth profile into the 2020s through key developments with attractive IRRs and material Mediterranean gas focused exploration opportunities.
The Enlarged Group has enhanced potential for a consistent stream of newsflow from production and development assets, as well as additional, balanced risk exploration opportunities.
Acquisition creates the leading full cycle, independent, gas-focused E&P company in the Mediterranean and will increase Energean's prominence and profile in the region and its ability to attract new investment opportunities.
European Utilities as a sector have been retreating from hydrocarbon investment for several years. By enabling the Edison E&P assets and highly experienced teams to operate with the
support and input from an E&P-investment focused parent company, Energean believes that significant value can be created across the portfolio.
Management team with significant shareholdings and investor alignment with a track record of value creation through acquisitions, rapid developments and asset improvement.
The initial consideration for the Acquisition is US\$750 million, to be adjusted for working capital, with additional contingent consideration of US\$100 million payable following first gas at the Cassiopea development. Edison will also receive an 8% royalty on profit production resulting from future discoveries made by upcoming exploration wells in the North Thekah Offshore and North East Hap'y Blocks, offshore Egypt.
The initial consideration will be funded through a US\$600 million committed bridge loan facility (the "Committed Bridge Loan Facility") and up to US\$265 million of equity financing through the Placing announced today. The total debt and equity capital raised has been sized to cover both the initial consideration and working capital requirements of the Enlarged Group.
The US\$600 million committed bridge loan facility is expected to be replaced in H2 2019 using a combination of a reserve based facility and/or corporate debt. The US\$100 million of contingent consideration is expected to be funded by the combined free cash flow of the Enlarged Group as well as any incremental reserve based facility and/or corporate debt capacity. Energean is also evaluating the potential sale of non-core assets of the Enlarged Group.
Energean also announces today the launch of a placing with institutional investors of new ordinary shares of 1 pence each in the capital of Energean (the "Placing Shares") to raise up to £211 million (approximately US\$265 million) (before expenses) (the "Placing").
The number of Placing Shares to be issued by the Company will not exceed 19.99% of the existing issued share capital of the Company.
The Placing will be conducted through an accelerated bookbuilding process which will be launched immediately following this Announcement. Certain Energean Directors, their related parties and senior managers of Energean have indicated their intention to participate in the Placing up to an aggregate amount of approximately £3 million (approximately US\$3.8 million). Any related party transactions as a result of such participation by Energean Directors would constitute exempt small transactions pursuant to paragraph 1 of Annex 1 to Chapter 11 of the Listing Rules. The Placing is not conditional upon Completion. The Placing is subject to the terms and conditions set out in Appendix 1 (which forms part of this Announcement).
The net proceeds of the Placing will be used to part-fund the Acquisition, with the remaining Acquisition consideration being funded through the Committed Bridge Loan Facility.
"The acquisition of Edison E&P establishes Energean as the leading independent, gas focused E&P company in the Mediterranean with a mainly operated, low cost, gas weighted portfolio, with the capability, focus and team to prosper in our rapidly changing industry. It will diversify Energean into a multi-country, multi-asset, full-cycle E&P company with scale, material cash flows, significant growth
and portfolio optionality. Edison E&P brings with it an exceptional team and I look forward to working with them as we build on the multiple opportunities ahead of us."
"Together, our priority is to maximise the economic value of the combined portfolio, whilst retaining as a key priority delivery of Karish and Tanin First Gas into Israel in Q1 2021. Since 2007, Energean has delivered significant growth and value for our investors and this acquisition is the next important step on this growth and value journey."
The Acquisition is subject to relevant anti-trust and regulatory approvals. Since the Acquisition constitutes a reverse takeover for the purposes of the Listing Rules, Energean will need to seek shareholder approval and re-admission of its ordinary shares to the Official List upon completion of the Acquisition, which is targeted by Q4 2019.
Energean will in due course send a circular to Energean Shareholders convening a general meeting to approve the Acquisition. The Energean Board considers the Acquisition to be in the best interests of Energean and the Energean Shareholders as a whole. Accordingly, the Energean Board intends to recommend that Energean Shareholders vote in favour the resolution in respect of the Acquisition to be proposed at the Energean General Meeting, as the Energean Directors intend to do in respect of their own beneficial holdings of 41,640,468 Energean Shares, representing, in aggregate, approximately 27.8% of the total issued share capital of Energean as at 3 July 2019, being the Last Practicable Date. Shareholders currently representing approximately 53.7% of the issued share capital of the Company have given irrevocable undertakings to the Company to vote their shares in favour of the resolution to approve the Acquisition at the General Meeting.
Morgan Stanley is acting as global coordinator and joint bookrunner, Stifel is acting as joint bookrunner and Peel Hunt and RBC (trading as RBC Capital Markets) ("RBC") are acting as co-lead managers in respect of the Placing.
A conference call for analysts and investors will be held today at 8.00a.m. Dial-in details are set out below:
United Kingdom Toll-Free: 08003589473 PIN: 45071357# United Kingdom Toll: +44 3333000804 Greece Toll: +30 2112111509 Israel Toll: +972 37207679
This summary should be read in conjunction with the full text of the following Announcement and its Appendices including, in particular, the risks and other factors that should be considered which are set out in Appendix 3. Capitalised terms used in this Announcement have the meanings given to them in Appendix 2.
Appendix 1 to this Announcement (which forms part of this Announcement) sets out the terms and conditions of the Placing. Persons who choose to participate in the Placing, by making an oral or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including Appendix 1) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in Appendix 1.
For further information contact:
| Energean | +44 (0)20 3655 7200 |
|---|---|
| Mathios Rigas, Chief Executive Kate Sloan, Head of Investor Relations and ECM |
+44 (0)79 1760 8645 |
| Camarco Financial PR to Energean |
+44 (0)20 3757 4983 |
Billy Clegg / Owen Roberts
Morgan Stanley +44 (0)20 7425 8000 Sole Financial Adviser, Global Coordinator, Joint Bookrunner and Corporate Broker Andrew Foster Michael O'Dwyer Mutlu Guner Martin Thorneycroft
Stifel +44 (0)20 7710 7600 Joint Bookrunner and Corporate Broker Callum Stewart Ashton Clanfield Nicholas Rhodes
Peel Hunt +44 (0)20 7418 8900 Co-lead Manager Richard Crichton Jock Maxwell Macdonald Sohail Akbar
RBC +44 (0)20 7653 4000 Co-lead Manager and Corporate Broker Matthew Coakes Martin Copeland Duncan Smith
The information contained within this Announcement is deemed by Energean to constitute inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014 ("MAR"). By the publication of this Announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this Announcement on behalf of Energean is Russell Poynter, Company Secretary.
Energean is a London Premium Listed FTSE 250 and Tel Aviv Listed E&P company with operations offshore Israel, Greece and the Adriatic. Energean has 347 mmboe of 2P reserves and 58 mmboe of 2C resources across its portfolio.
In March 2018 the Company took Final Investment Decision on its flagship Karish and Tanin gas development project, where it intends to use the only FPSO in the Eastern Mediterranean to produce first gas in 2021. Energean has already signed firm contracts for 4.2 bcma, and has a further contingent contract of 0.4 bcma, of gas sales into the Israeli domestic market. Future gas sales agreements will focus on both the growing Israeli domestic market and key export markets in the region. In Greece, the Company is pursuing an ongoing investment and development programme to increase production from its Prinos and Prinos North oil fields and to develop the Epsilon oil field, located in the Gulf of Kavala, Northern Greece.
Energean has five exploration licences offshore Israel, and a 25 year exploitation licence for the Katakolo offshore block in Western Greece and additional exploration potential in its other licences in Western Greece and Montenegro.
No action has been taken by Energean, Morgan Stanley, Stifel, Peel Hunt, RBC or any of their respective affiliates, agents, directors, officers or employees that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required.
No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published. Persons needing advice should consult an independent financial adviser.
THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION CONTAINED IN THEM, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA, HONG KONG, SINGAPORE OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.
The securities referred to herein have not been and will not be registered under the US Securities Act 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold directly or indirectly in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any state or any other jurisdiction of the United States. The Placing Shares are, subject to certain exceptions, being offered and sold only outside the United States in accordance with Regulation S under the Securities Act. No public offering of securities is being made in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this Announcement, will not be accepted.
The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offering in compliance with the securities laws of any state, province or territory of Australia, Canada, Hong Kong, Japan, New Zealand, Singapore or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand, Singapore or the Republic of South Africa or any other jurisdiction in which such activities would be unlawful.
Certain statements contained in this Announcement, including those in Appendix 3, constitute "forward-looking statements" with respect to the financial condition, performance, strategic initiatives, objectives, results of operations and business of the Energean Group, the Edison E&P Group and the Enlarged Group.
All statements other than statements of historical facts included in this Announcement are, or may be deemed to be, forward-looking statements. Without limitation, any statements preceded or followed by or that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''anticipates'', ''estimates'', ''projects'', ''will'', ''may'', "would", "could" or "should", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the Energean Group's, the Edison E&P Group's or the Enlarged Group's operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on the Energean Group's, the Edison E&P Group's or the Enlarged Group's business.
Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward-looking statements. The important factors that could cause the Energean Group's, the Edison E&P Group's or the Enlarged Group's actual results, performance or achievements to differ materially from those in the forwardlooking statements include, among others, economic and business cycles, the terms and conditions of the Energean Group's, the Edison E&P Group's or the Enlarged Group's financing arrangements, foreign currency rate fluctuations, competition in the Energean Group's, the Edison E&P Group's or the Enlarged Group's principal markets, acquisitions or disposals of businesses or assets and trends in the Energean Group's, the Edison E&P Group's or the Enlarged Group's principal industries. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.
Readers of this Announcement are advised to refer, in particular, to Appendix 3 of this Announcement for a more complete discussion of the factors that could affect the Energean Group's, the Edison E&P Group's or the Enlarged Group's future performance and the industry in which the Energean Group and the Edison E&P Group operate or the Enlarged Group would operate. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this Announcement may not occur.
The forward-looking statements contained in this Announcement speak only as of the date of this Announcement. Energean, the Energean Directors, Morgan Stanley, Stifel, Peel Hunt and RBC each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation, the Listing Rules, MAR, the DTRs, the rules of the London Stock Exchange or the FCA.
Morgan Stanley & Co. International plc and RBC Europe Limited are each authorised by the Prudential Regulatory Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority, Stifel Nicolaus Europe Limited and Peel Hunt LLP are each authorised and regulated by the Financial Conduct Authority in the United Kingdom. Each of Morgan Stanley, Stifel, Peel Hunt and RBC is acting exclusively for Energean and no one else in connection with the Acquisition, the Placing, the content of this Announcement and other matters described in this Announcement. Morgan Stanley, Stifel, Peel Hunt and RBC will not regard any other person as their respective clients in relation to the Acquisition, the Placing, the content of this Announcement and other matters described in this Announcement and will not be responsible to anyone (including any placees) other than Energean for providing the protections afforded to their respective clients or for providing advice to any other person in relation to the Acquisition, the Placing, the content of this Announcement or any other matters referred to in this Announcement.
This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Morgan Stanley, Stifel, Peel Hunt, RBC or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
This Announcement contains certain financial measures that are not defined or recognised under IFRS (International Financial Reporting Standards), including EBITDAX (being earnings before interest, tax, depreciation, amortisation and exploration expenses). Information regarding these measures are sometimes used by investors to evaluate the efficiency of a company's operation and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. There are no generally accepted principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company. These measures, by themselves, do not provide a sufficient basis to compare Energean's performance with that of other companies and should not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of operating performance, or as an alternative to cash generated from operating activities as a measure of liquidity.
Any indication in this Announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Energean Group, the Edison E&P Group or the Enlarged Group, as appropriate, for the current or future years would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow for the Energean Group, the Edison E&P Group or the Enlarged Group, as appropriate.
Neither the content of Energean's website (or any other website) nor the content of any website accessible from hyperlinks on Energean's website (or any other website) is incorporated into or forms part of this Announcement.
This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.
Energean is pleased to announce that it has entered into a conditional sale and purchase agreement to acquire Edison Exploration & Production S.p.A. ("Edison E&P") from Edison S.p.A. ("Edison") (the "Acquisition") for US\$750 million, to be adjusted for working capital, with additional contingent consideration of US\$100 million payable following first gas from the Cassiopea development, offshore Italy. Edison will also receive an 8% royalty on profit production resulting from future discoveries made by upcoming exploration wells in the North Thekah Offshore and North East Hap'y Blocks, offshore Egypt.
Edison E&P's portfolio of assets includes producing assets in Egypt, Italy, Algeria, the UK North Sea and Croatia, development assets in Egypt, Italy and Norway, and balanced-risk exploration opportunities across the portfolio. The Edison E&P portfolio adds working interest 2P reserves of 292 mmboe and 2018 net working interest production of 69 kboe/d (49 kboe/d on a net entitlement basis).
Energean also announces today the launch of a placing with institutional investors of new ordinary shares of 1 pence each in the capital of Energean (the "Placing Shares") to raise up to £211 million (US\$265 million) (before expenses) (the "Placing"). The Placing is not conditional upon Completion. The Placing is subject to the terms and conditions set out in Appendix 1 (which forms part of this Announcement).
The net proceeds of the Placing will be used to part-fund the initial consideration for the Acquisition, with the remaining initial consideration being funded through the Committed Bridge Loan Facility.
The facility agreement in respect of the Committed Bridge Loan Facility will be entered into between, amongst others, the Company and certain financial institutions as lenders, security agent and facility agent (the "Bridge Facility Agreement"). Pursuant to the terms of the Bridge Facility Agreement, the Company will grant security over its assets in favour of the security agent.
The Acquisition is subject to relevant anti-trust and regulatory approvals, as described further in paragraph 7 (Principal Terms of the Acquisition) of this Announcement. Since the Acquisition constitutes a reverse takeover for the purposes of the Listing Rules, Energean will need to seek shareholder approval and re-admission of its ordinary shares to the Official List upon completion of the Acquisition.
Completion of the Acquisition is expected in Q4 2019.
Since its Initial Public Offering in March 2018, Energean has continued to focus on its strategy of becoming the leading independent, gas-focused E&P company in the Mediterranean, driven by development of the 2.4 Tcf Karish and Tanin gas fields, offshore Israel. To accelerate this strategy, Energean sought to assess acquisition opportunities within its core region of focus on a case-by-case basis, focusing only on opportunities that would create meaningful value for shareholders.
The Acquisition of Edison E&P on attractive metrics will significantly increase Energean's scale and diversification by adding a complementary gas-focused portfolio of accretive development, appraisal and exploration opportunities, whilst immediately contributing EBITDAX and cashflow to support the group's strategic growth and medium-term ambition to start paying a dividend. The key highlights are outlined below.
The Acquisition delivers significant additional scale to Energean's reserve base, which secures and reinforces the Company's production profile longevity and further growth potential.
Edison E&P's portfolio contains 292 mmboe of working interest 2P reserves. Combined with Energean's existing 347 mmboe 2P reserve base, the Enlarged Group will have a total of 639 mmboe of 2P reserves, the distribution of which is outlined below, and will be one of the largest independent E&P companies by reserves listed on the London Stock Exchange.
| Country | 2P Reserves – mmboe |
% of combined business |
|---|---|---|
| portfolio | ||
| Israel | 297 | 46% |
| Egypt | 152 | 24% |
| Italy | 85 | 13% |
| Greece | 50 | 8% |
| Norway | 26 | 4% |
| Algeria | 24 | 4% |
| UK North Sea | 4 | 1% |
| Croatia | 2 | <1% |
The Acquisition increases the number of countries in which Energean operates from four to nine, and the number of countries in which it produces from one to six. Diversification has been a strategic target of Energean's M&A strategy, in order to spread risk across the portfolio.
Edison E&P's 2018 working interest production was 69 kboe/d. Looking ahead, the Enlarged Group is expected to produce more than 140 kboe/d in 2021, when the Karish and Tanin development comes onstream, with a trajectory to approximately 200 kboe/d once the Energean Power FPSO reaches full capacity.
Edison E&P brings 282 employees, which combined with the existing Energean team, will provide highly skilled and experienced coverage of all key geographies of the combined portfolio. Edison will provide transitional services to the Enlarged Group, ensuring a seamless integration process.
Energean's growth strategy is focused on gas, demonstrated by the fact that its existing production stream is expected to be in excess of 85% gas once the Karish and Tanin development comes onstream, a project that is enabling the Israeli economy to transition from coal to gas. Gas contributed 76% of Edison E&P's 2P reserves and 80% of its 2018 production, which complements Energean's stated, gasfocused transition fuel growth strategy.
The majority of Energean and Edison E&P's gas is sold under fixed priced gas contracts, providing stability and predictability to cash flow and helping to mitigate the impact of ongoing price volatility in the oil markets.
Edison E&P's reserve base consists primarily of producing assets, resulting in 2018 EBITDAX of US\$434 million and operating cash flow of US\$302 million. This materially enhances Energean's current cash flow ahead of Karish and Tanin First Gas (expected in Q1 2021) and to amplify the position thereafter, supporting Energean's medium-term target to start paying a dividend.
Edison E&P generated US\$621 million of revenues in 2018 and Energean reported US\$90 million for the same period. Edison E&P's low unit operating costs of US\$14.1/boe are accretive to Energean, which reported US\$18/boe in 2018.
Edison E&P has two key, near-term development assets (NEA in Egypt and Cassiopea in Italy) that are expected to complement and amplify Energean's existing growth profile. Energean views these development assets as highly attractive, delivering estimated IRRs of 23% and 20%, respectively. Further information on the assets is provided below.
The portfolio also includes additional potential from infill-drilling, field life extension projects, appraisal opportunities and balanced risk exploration opportunities, including two material, near-term exploration wells offshore Egypt.
The Enlarged Group has enhanced potential for a consistent stream of news flow from production and development assets, as well as additional, balanced risk exploration opportunities.
Key upcoming events include:
The Acquisition creates a leading full cycle, independent gas-focused E&P company in the Mediterranean and will increase Energean's prominence and profile in the region and its ability to attract new investment opportunities. The Enlarged Group's diversification, increased scale, operating capabilities and footprint will position Energean for further strategic growth. Country entries into Egypt and Algeria, in particular, provide a footprint for further activity.
Over the last few years, European Utilities have retreated from investment in Upstream activities. The Energean management team has a track record of creating value both through acquisitions and organically. By enabling the Edison E&P assets and highly experienced teams to operate with the support and input from an E&P-investment focused parent company, Energean believes that significant value can be created across the portfolio.
Additionally, Energean management which has delivered considerable value to shareholders to date, are significant shareholders of the business and thus aligned with investors.
The initial consideration for the Acquisition is US\$750 million, to be adjusted for working capital, with additional contingent consideration of US\$100 million payable following first gas at the Cassiopea development. Edison will also receive an 8% royalty on profit production resulting from future discoveries made by upcoming exploration wells in the North Thekah Offshore and North East Hap'y Blocks, offshore Egypt.
The initial consideration will be funded through a US\$600 million committed bridge loan facility and up to US\$265 million of equity financing through the Placing announced today. The total debt and equity capital raised has been sized to cover both the initial consideration and working capital requirements of the Enlarged Group. The US\$600 million committed bridge loan facility is expected to be replaced in H2 2019 using a combination of reserve based facility and/or corporate debt. The US\$100 million of contingent consideration is expected to be funded by the combined free cash flow of the Enlarged Group as well as any incremental reserve based facility and/or corporate debt capacity. Energean is also evaluating the potential sale of non-core assets of the Enlarged Group.
Energean today also entered into a standby underwriting agreement with Morgan Stanley for a total commitment amount of US\$265 million for the purposes of providing fund certainty in connection with the Acquisition. Following successful completion of today's Placing, the standby underwriting agreement will terminate.
| Admission of Placing Shares | 8 July 2019 |
|---|---|
| Regulatory Approvals and Partner Consents | H2 2019 |
| Reserve Based Facility and Corporate Debt Takeout of Bridge Facility | H2 2019 |
| Publication of Circular and EGM | Q4 2019 |
| Publication of Enlarged Group Prospectus and Technical Readmission | Q4 2019 |
Completion of the Acquisition is expected in Q4 2019.
The Edison E&P portfolio consists of a material, Mediterranean-focused reserve base with assets across Egypt, Italy, Algeria, Croatia, Norway and UK, and net working interest 2P reserves of 292 mmboe (76% gas). The portfolio delivered 2018 working interest production of 69 kboe/d (80% gas).
| Country | 2P Reserves – mmboe |
2019 Expected Net Production – kboe/d |
|---|---|---|
| Egypt | 152 | 50 |
| Italy | 85 | 11 |
| Norway | 26 | - |
| Algeria | 24 | 5 |
| UK | 4 | 3 |
|---|---|---|
| Croatia | 2 | <1 |
Edison E&P's Egyptian portfolio is full-cycle, consisting of production at the 100% owned and operated Abu Qir field, development at the 100% owned and operated NEA field and exploration optionality that most notably includes three wells that are expected to spud before year end 2019.
| Working Interest: | 100% (via Abu Qir Petroleum Co.) |
|---|---|
| Operator: | Abu Qir Petroleum Co. |
| WI 2P Reserves: | 131 mmboe (86% gas) |
| 2019 Expected Net Production: | 50 kboe/d |
| Cumulative Net Capex - next 5 years: |
c.US\$350 MM |
| 2018 year-end receivables balance (of which overdue): |
US\$240 MM (US\$147 MM) |
The Abu Qir concession is a gas and condensate field located in the shallow waters of Abu Qir Bay in the Nile Delta of Egypt. It is one of the largest gas producing hubs in Egypt, is composed of three fields (Abu Qir, North Abu Qir and West Abu Qir) and consists of an operating network of six interconnected platforms, each of which is linked to the local market via a pipeline. Abu Qir is a long-term producing asset with net working interest 2P reserves of 131 mmboe (86% gas).
Edison E&P has been operating Abu Qir since it won the licence tender in 2008, and this 10+ year track record of operating this low-risk producing asset reinforces the ability to realise further upside from infill drilling opportunities that can be developed quickly and cost effectively using existing infrastructure.
100% of the gas produced at Abu Qir is sold to EGPC under a Brent-linked gas price. At Brent prices of between US\$40/bbl and US\$72/bbl the gas price is US\$3.5/mmBTU, limiting volatility and exposure to commodity price fluctuations. There is a gas price floor of US\$1.29/mmBTU.
Edison E&P's receivables position at 31 December 2018 was US\$280 million, of which \$147 million was classified as overdue. The overdue receivables balance has improved from \$324 million at 31 December 2016, in line with the Egyptian Ministry of Petroleum's plans to settle total arrears for International Oil Companies by the end of 2019, and in part due to through agreements in place to accelerate the recovery of overdue receivables at this asset through direct or independent marketing of condensate and service cost offset.
In line with other Egyptian production sharing contracts, there are no decommissioning liabilities associated with Abu Qir and the other Egyptian assets.
| Working Interest: | 100% (via Petro Amriya Co.) |
|---|---|
| Operator: | Petro Amriya Co. |
| WI 2P Reserves: | 20 mmboe (88% gas) |
|---|---|
| Expected start-up year: | 2022 |
| Cumulative Net Capex to start-up: | c.US\$110 MM |
| Asset IRR: | 20% |
The NEA concession is a 100% owned and operated gas and condensate field located offshore of the Western Nile Delta in Egypt and next to Abu Qir. The asset holds net working interest 2P reserves of 20 mmboe (88% gas).
The asset's two fields Python and Yazzi are expected to be developed across, and produced through, the existing Abu Qir gas infrastructure, generating significant synergies and cost savings versus a standalone development. Beyond these two fields, there is further upside from the North Idku development, which is located adjacent to NEA and is expected to be tied-back to NEA infrastructure. Energean management estimates cumulative net capex to start-up of production of approximately US\$110 million (which equates to US\$5.6/boe unit development capex and an internal rate of return of 20%. The development plan for this asset assumes four shallow water subsea wells integrated with the Abu Qir facilities whereby topside facilities are to be hosted onboard the North Abu Qir PIII Platform and operated remotely. No expansion of the existing onshore gas processing plant is required.
From a commercial perspective, Edison E&P is in advanced discussions to agree a revised gas price at NEA of US\$4.60/mmbtu.
The Company estimates that there are 2.9 billion boe net un-risked resources across Edison E&P's exploration acreage in Egypt, which is primarily split across three main exploration assets:
Edison E&P's Italian portfolio consists primarily of production and development, but also includes near-field, infrastructure-led exploration optionality. In 2018, total production was 11 kboe/d, of which approximately 50% was operated and 50% was non-operated. Edison E&P has a strategic partnership in Italy with ENI, which is the Operator for the majority of Edison E&P's non-operated licences. Cassiopea is the key development opportunity, contributing approximately 35% of overall Italian reserves and expected to more than double Italian production, at peak.
| Working Interest: | 40% |
|---|---|
| Partners: | Eni (60%) |
| Operator: | Eni |
| WI 2P Reserves: | 31 mmboe (100% gas) |
| Expected start-up year: | 2022 |
| Cumulative Net Capex to start-up: | c.US\$240 MM |
| Asset IRR: | 23% |
Cassiopea is an offshore gas development asset located in the Strait of Sicily, offering medium-to-long term growth for Edison E&P. It is the largest greenfield gas development in Italy and, once onstream, is expected to be one of the country's largest producing gas fields. Net peak production is expected to be 14 kboe/d.
This asset will be developed with four subsea wells (consisting of two new wells and two recompletions), with an optimised subsea production system and sealine using existing facilities for shore approach, a wells control system and chemical injection from an existing Eni platform, and onshore gas treatment, in synergy with Gela Refinery operations. Cassiopea is expected to optimise the gas export sealine using existing facilities for shore approach.
There is a gas sale and purchase agreement with Edison at Cassiopea, which is expected to remain in place following the Acquisition.
There is additional upside potential from the Cassiopea asset through the Gemini and Centauro prospects, which hold estimated recoverable resources of 9.7 mmboe (Pmean). These reservoirs have strong geological and geophysical similarities with the Cassiopea discovery and they are estimated to have a 90% geological chance of success. These prospects are expected to be drilled in 2021 at a cost of approximately US\$30 million (net).
| Vega | Rospo Mare | Clara North West |
Sarago Mare |
|
|---|---|---|---|---|
| Working Interest: |
60% | 62% | 49% | 85% |
| Partners: | Eni (40%) | Eni (38%) | Eni (51%) | GasPlus (15%) |
| Operator: | Edison E&P |
Edison E&P |
Eni | Edison E&P |
| WI 2P | 8 mmboe | 14 mmboe | 6 mmboe | 5 mmboe (4% |
| Reserves: | (100% oil) | (100% oil) | (100% gas) | gas) |
| 2019 | 1 kboe/d | 2 kboe/d | 3 kboe/d | 1 kboe/d |
| Expected |
| Vega | Rospo Mare | Clara North West |
Sarago Mare |
|
|---|---|---|---|---|
| Net Production: |
The Edison E&P portfolio in Italy also includes (i) Vega, an offshore oil field located in the Sicilian Channel; (ii) Rospo Mare, an offshore oil field located in the Adriatic Sea; (iii) Clara North West, a gas field located in the Adriatic Sea; and (iv) Sarago Mare, an offshore oil field located in the Adriatic Sea.
These assets have marketing agreements in place with key long term buyers, including BP at Vega, Total at Rospo Mare, API at Sarago Mare and Edison at Clara North West.
Energean management estimates a total decommissioning spend through life-of field at Edison E&P's Italian assets of approximately US\$540 million (of which approximately US\$100 million is expected to be due over the next 10 years). There is a decommissioning provision of approximately €390 million (approximately US\$450 million) in place on the Italian assets as of year-end 2018.
Energean is committed to optimising decommissioning activities and spend at these assets through initiatives such as proactive interaction with local government and/or regulatory bodies, delaying decommissioning through field life extension projects and grouping adjacent assets for decommissioning operations, amongst others.
| Working Interest: | 11% |
|---|---|
| Partners: | Sonatrach (40%), Repsol (29%), Wintershall DEA (20%) |
| Operator: | Repsol |
| WI 2P Reserves: | 24 mmboe (100% gas) |
| 2019 Expected Net Production: | 5 kboe/d |
| 2018 Net Exploration Recovery opening balance: |
US\$56 MM |
Reggane is a large, long life gas development that came onstream in 2017 with plateau production rate achieved in August 2018 and is operated by Repsol. The asset is comprised of six gas fields with 8 producing wells drilled since the start of development drilling in 2015. Edison E&P holds an 11% stake, which represents net working interest 2P reserves of 24 mmboe (100% gas). It is a self-funded asset, in which capex requirements are limited to infill drilling and maintenance capex.
Produced gas is transported by pipeline as part of the approximately 210km gathering network to the existing national gas evacuation system where it is marketed. An offtake agreement with Sonatrach is in place and was signed for a period of 12 years from production plateau.
| Working Interest: | 70% |
|---|---|
| Partners: | INA (30%) |
| Operator: | Edina |
| WI 2P Reserves: | 2 mmboe (100% gas) |
| 2019 Expected Net Production: | 1 kboe/d |
Izabela is an offshore gas asset located in the Croatian Adriatic Sea. It is a two-platform structure with five producing wells and came onstream in 2014. The production profile at Izabela is expected to decline, however to be offset by near-term development optionality at this asset.
Potential development upside at this asset includes the Irena development, which could be a two-well concept tied-back to Izabela. If the development concept is pursued, production startup could be targeted for 2022. Produced gas can be marketed into either the Italian or Croatian markets via existing infrastructure already in place in both countries.
Edison E&P's Norweigan portfolio is growth-oriented, consisting of two developments and a range of exploration opportunities.
| Working Interest: | 15% | |
|---|---|---|
| Partners: | Wintershall DEA (45%), Cairn (20%) Spirit Energy (20%) |
|
| Operator: | Wintershall DEA | |
| WI 2P Reserves: | 14 mmboe (34% gas) | |
| Expected start-up year: | 2021 | |
| Cumulative Net Capex to start-up: | c. US\$170 MM | |
| Asset IRR: | 30% |
Nova is an oil and gas field currently under development that is expected to produce 8 kboe/d (net) at peak. The development concept is a tie-back to Gjoa with first oil expected in 2021. The development plan is currently on schedule and on budget with the Plan for Development and Operation submitted in May 2018 and approximately 15% of the project completed by year-end 2018. All the key subsea, topside and drilling rig contracts have already been awarded.
Oil from this asset is expected to be transported to the Mongstad Terminal in Norway via Gjoa infrastructure and gas to the St. Fergus Terminal in the UK via Gjoa infrastructure.
| Working Interest: | 10% |
|---|---|
| ------------------- | ----- |
| Partners: | Wintershall DEA (55%), Petoro (35%) |
|---|---|
| Operator: | Wintershall DEA |
| WI 2P Reserves: | 12 mmboe (96% gas) |
| Expected start-up year: | 2020 |
| Cumulative Net Capex to start-up: | c.US\$70 MM |
| Asset IRR: | 46% |
Dvalin is a gas and condensate development that is expected to contribute net production of 5 kboe/d at peak. The development concept is a tieback to the Heidrun Platform and first gas is expected in 2020. The development plan is currently on schedule and budget with the Plan for Development and Operation approved in March 2017 and over 40% of the project completed by end of Q3 2018. All the key subsea, topside and drilling rig contracts have already been awarded.
Gas from this asset is expected to be transported either to the Nyhamna processing plant via the Polarled pipeline or to enter the Gassled network to be transported to the UK and Continental Europe.
Edison E&P's UK business consists of production and appraisal assets. The producing asset base is mature with some decommissioning ongoing, although there is substantial scope for decommissioning at the key fields, Scott and Telford, to be delayed beyond the currently expected start date of 2025. In January 2019, Total announced the 250 mmboe (gross) Glengorm discovery, in which Edison E&P holds a 25% working interest, substantially increasing the value associated with Edison E&P's UK portfolio.
| Scott | Telford | |
|---|---|---|
| Working Interest: | 10% | 16% |
| Partners: | Nexen (42%), Total (27%), Dana (21%) |
Nexen (80%), Total (4%) |
| Operator: | Nexen | Nexen |
| WI 2P Reserves: | 2 mmboe (10% gas) | 1 mmboe (15% gas) |
| 2019 Expected Net Production: |
2 kboe/d | 1 kboe/d |
The Scott and Telford assets are mature producing oil and gas assets located in the Central North Sea. Scott is a two-platform structure with twelve producing wells. Production started in 1993 and oil is transported from this asset to Cruden Bay via the Forties infrastructure network. Telford currently has three producing wells and is tied-back to the Scott platform. Production started in 1996 and oil and gas are transported from this asset via the Forties and Scottish Area Gas Evacuation System (SAGE) networks, respectively.
| Working Interest: | 25% |
|---|---|
| Partners: | Nexen (50%), Total (25%) |
| Operator: | Nexen |
| Announced reserves by CNOOC Limited at discovery: |
62.5 mmboe |
In January 2019, CNOOC Limited announced the largest UK North Sea gas discovery in ten years on the Glengorm prospect, which is located in the West Central Graben region. The discovery is close to existing infrastructure and offers tie-back possibilities, such as the Elgin-Franklin platform and the Culzean project, amongst others.
The rest of the UK North Sea portfolio consists of other mature producing assets located in the Southern Gas Basin. The production profile at these assets is expected to decline with decommissioning anticipated in the near- to medium-term, however there is optimisation potential from these assets by delaying the scope of this decommissioning.
| FY 2018(1) US\$ |
|
|---|---|
| Sales Revenue: | 621 million |
| Unit Cost of Production (US\$/boe): |
14 |
| Adjusted EBITDAX: | 434 million |
| Profit before Tax | 73 million |
| Operating Cash Flow: | 302 million |
| Capital Expenditure: | 160 million |
| Gross Assets | 2,472 million |
| Book Value | 1,240 million |
(1) All financial information is based on unaudited accounts.
At the Prinos area in Greece, average production for H1 2019 was 4,032 bopd net to Energean. As previously announced, Energean is currently implementing a cost reduction programme which is expected to realise cost savings of approximately US\$30-40 million in the Prinos area in 2019. Following the completion of the Epsilon wells, EL-1 and EL-2, and the discovery of the deeper reservoirs comprising further upside potential in the Epsilon field, drilling of EL-3 has commenced. Technical work is ongoing to update the Epsilon field development plan in order to monetise both the
A reservoir and the deeper reservoir. Additionally, a new CPR for Epsilon is being undertaken with the Company's reserves auditors.
In Israel, operations for the development of Energean's flagship Karish and Tanin project are on track, with the pipeline beach crossing at D'or having been completed in the period, with pipeline installation from Karish to D'or expected to begin imminently. The drilling of the three Karish Main production wells is continuing on schedule, as is work on the Hull and Topsides of the Energean Force FPSO, with sailaway from the Cosco Yard expected in Q4 2019.
Energean and Edison have today entered into the Purchase Agreement in respect of the Acquisition, pursuant to which Energean has agreed, on the terms and subject to the conditions of the Purchase Agreement, to acquire Edison E&P from Edison for US\$750 million in cash, to be adjusted for working capital. In addition, Energean has agreed to pay a further US\$100 million in cash following first production at Cassiopea, Italy (expected 2022). Edison will also receive an 8% royalty on profit production resulting from discoveries made by exploration wells drilled in the North Thekah Offshore and North East Hap'y Blocks in Q4 2019 / Q1 2020.
The Acquisition is subject to relevant anti-trust, regulatory and shareholder approvals. As the Acquisition constitutes a reverse takeover for the purposes of the Listing Rules, Energean will need to seek re-admission of its ordinary shares to the Official List upon completion of the Acquisition.
Under the terms of the Purchase Agreement, a 100% subsidiary of the Company, expected to be Energean Capital Limited (the "Purchaser"), will acquire the shares in Edison E&P.
Edison has provided customary warranties to the Purchaser, subject to certain limitations, plus indemnities to cover specific identified risks including (i) claims from the National Iranian Oil Corporation and costs and liabilities arising from closure of the Iranian branch of Edison International S.p.A., (ii) certain environmental claims in relation to operations in Italy and (iii) any loss incurred from inclusion by OFAC on the Specifically Designated and Blocked Persons list of PB Tankers and FSO Alba Marina and the resolution of these sanctions
Edison has also provided customary interim covenants on the conduct of business of Edison E&P prior to Completion.
Completion of the Acquisition is conditional on the satisfaction or waiver, of certain conditions including regulatory approvals in Italy, Norway, Egypt, UK, Algeria, Greece, France and Israel, antitrust approval in Israel, the approval of Energean's shareholders for the transaction, the approval of the Circular and Prospectus by the FCA and lifting of US sanctions on FSO Alba Marina and resumption of operations at Rospo Mare, Italy.
Completion of the Acquisition is subject to a longstop date of 10 months after signing, which may be extended for up to a further 2 months to satisfy certain regulatory conditions if not obtained by that date. The Purchase Agreement may also be terminated for any breach of certain fundamental warranties and the occurrence of any material adverse event affecting Edison E&P following signing.
If Completion does not occur due to a breach by the Purchaser of any of its obligations under the Purchase Agreement, Energean will be liable to pay Edison an amount equal to US\$15 million by way of liquidated damages. If Completion does not occur due to the failure to obtain (i) Israeli anti-trust approval, (ii) the approval of the Company's shareholders to the Acquisition or (iii) the approval of the Prospectus for Re-Admission by the FCA, Energean isrequired to pay Edison an amount equal to US\$5 million.
The Company has also received irrevocable undertakings from shareholders currently representing approximately 53.7% of the Company's issued share capital that they would vote in favour of the Acquisition.
Energean also announces today the launch of a placing with institutional investors of new ordinary shares of 1 pence each in the capital of Energean (the "Placing Shares") to raise up to £211 million (US\$265 million) (before expenses) (the "Placing").
The number of Placing Shares to be issued by the Company will not exceed 19.99 per cent. of the existing issued share capital of the Company.
The Placing will be conducted through an accelerated bookbuilding process which will be launched immediately following this Announcement. Certain Energean Directors, their related parties and senior managers of Energean have indicated their intention to participate in the Placing up to an aggregate amount of approximately £3 million (approximately US\$3.8 million). Any related party transactions as a result of such participation by the Energean Directors would constitute exempt small transactions pursuant to paragraph 1 of Annex 1 to Chapter 11 of the Listing Rules.
The Placing Shares, when issued, will rank pari passu in all respects with each other and with the ordinary shares of the Company ("Ordinary Shares").
Applications will be made (i) to the FCA for admission of the Placing Shares to the premium listing segment of the Official List, (ii) to London Stock Exchange for admission to trading on its main market for listed securities (together, "Admission") and (iii) to the Tel Aviv Stock Exchange for listing of the Placing Shares. It is expected that Admission will become effective on or around 8 July 2019 and that dealings in the Placing Shares will commence at that time. The Placing is conditional, among other things, upon Admission becoming effective and the placing agreement between Energean, Morgan Stanley, Stifel, Peel Hunt and RBC (the "Placing Agreement") not being terminated in accordance with its terms. Appendix 1 (which forms part of this Announcement) sets out further information relating to the Placing Agreement and the terms and conditions of the Placing.
The Placing is not conditional upon Completion of the Acquisition. In the event that the Acquisition does not Complete, the Energean Directors would consider, in light of circumstances at the time, the appropriate use of the funds raised.
Morgan Stanley is acting as global coordinator and joint bookrunner, Stifel is acting as joint bookrunner and Peel Hunt and RBC are acting as co-lead managers, in respect of the Placing. The book will open with immediate effect following this Announcement. The timing of the closing of the book and allocations are at the discretion of Morgan Stanley and Energean.
Your attention is drawn to the detailed terms and conditions of the Placing set out in Appendix 1.
Number of Ordinary Shares in issue before the Placing 153,326,901
up to £211 million (approximately US\$265 million)
Gross proceeds of the Placing
Further details in relation to the Acquisition will be set out in the Circular which is expected to be published in due course.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING EXCEPT AS DISCLOSED IN THIS ANNOUNCEMENT UNDER "DETAILS OF THE PLACING". THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN (THE "ANNOUNCEMENT") IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (THE "EEA"), PERSONS WHO ARE QUALIFIED INVESTORS ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF DIRECTIVE 2003/71/EC, AS AMENDED, INCLUDING BY THE 2010 PD AMENDING DIRECTIVE (DIRECTIVE 2010/73/EU), TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); OR (B) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE (I) PERSONS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONAL" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"), OR (II) PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER, OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS REFERRED TO IN (A), (B) AND (C) ABOVE TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING SHARES.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF, OR WITH ANY SECURITIES REGULATORY AUTHORITY OF, ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN EXCEPTIONS, THE PLACING IS BEING MADE OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS WITHIN THE MEANING OF, AND IN RELIANCE ON, REGULATION S UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE SHARES REFERRED TO IN THIS ANNOUNCEMENT IS BEING MADE IN THE UNITED KINGDOM, THE UNITED STATES ANY RESTRICTED TERRITORY OR ELSEWHERE.
Unless otherwise stated, capitalised terms in this Appendix have the meanings ascribed to them in Appendix 2.
This Announcement is for information only and does not itself constitute or form part of an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities referred to herein in any jurisdiction including, without limitation, the United States, any Restricted Territory (as defined below) or in any jurisdiction where such offer or solicitation is unlawful. No public offering of securities will be made in connection with the Placing in the United Kingdom, the United States, any Restricted Territory or elsewhere.
This Announcement, and the information contained herein, is not for release, publication or distribution, directly or indirectly, to persons in the United States, Australia, New Zealand, Hong Kong Canada, Japan, the Republic of South Africa and Singapore (each a "Restricted Territory") or in any jurisdiction in which such publication or distribution is unlawful. The distribution of this Announcement and the Placing and/or the offer or sale of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or by Morgan Stanley & Co. International plc ("Morgan Stanley" or the "Global Coordinator"), Stifel Europe Nicolaus Limited ("Stifel"), Peel Hunt LLP ("Peel Hunt") or RBC Europe Limited ("RBC" and together with Morgan Stanley, Stifel and Peel Hunt, the "Banks") or any of their respective affiliates or agents which would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any such action. Persons into whose possession this Announcement comes are required by the Company and the Banks to inform themselves about, and to observe, any such restrictions.
All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus. This Announcement is being distributed and communicated to persons in the UK only in circumstances to which section 21(1) of the Financial Services and Markets Act 2000, as amended ("FSMA") does not apply.
The Placing has not been approved and will not be approved or disapproved by the U.S. Securities and Exchange Commission, any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is unlawful.
Subject to certain exceptions, the securities referred to in this Announcement may not be offered or sold in any Restricted Territory or to, or for the account or benefit of, a citizen or resident, or a corporation, partnership or other entity created or organised in or under the laws of a Restricted Territory.
This Announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by any Bank or any of its respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any party or its advisers, and any liability therefore is expressly disclaimed.
The Banks are acting exclusively for the Company and no-one else in connection with the Placing and are not, and will not be, responsible to anyone (including the Placees) other than the Company for providing the protections afforded to their clients nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement.
None of the Company or the Banks or their respective affiliates or agents makes any representation or warranty, express or implied to any Placees regarding an investment in the securities referred to in this Announcement under the laws applicable to such Placees. Each Placee should consult its own advisers as to the legal, tax, business, financial and related aspects of an investment in the Placing Shares.
By participating in the Placing, Placees (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given will (i) be deemed to have read and understood this Announcement, in its entirety; and (ii) be making such offer on the terms and conditions contained in Appendix, including being deemed to be providing (and shall only be permitted to participate in the Placing on the basis that they have provided) the representations, warranties, acknowledgements and undertakings set out herein.
In particular each such Placee represents, warrants and acknowledges that:
Defined terms used in this Appendix are set out at in Appendix 2.
Following this Announcement, the Managers will commence a bookbuilding process in respect of the Placing (the "Bookbuild") to determine demand for participation in the Placing by Placees. No commissions will be paid to Placees or by Placees in respect of any Placing Shares. The book will open with immediate effect. Members of the public are not entitled to participate in the Placing. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing.
Morgan Stanley is acting as sole global coordinator and joint bookrunner, Stifel is acting as joint bookrunner and Peel Hunt and RBC are acting as co-lead managers in connection with the Placing. The Banks have entered an agreement with the Company (the "Placing Agreement") under which, subject to the conditions set out therein, Morgan Stanley, Stifel and Peel Hunt (together, the "Managers") will agree to use their respective reasonable endeavours to procure Placees for the Placing Shares at a price determined following completion of the Bookbuild and as set out in the Placing Agreement.
The price per Ordinary Share at which the Placing Shares are to be placed (the "Placing Price") and the final number of Placing Shares will be decided at the close of the Bookbuild following the execution of the placing terms by the Company and the Banks (the "Placing Terms"). The timing of the closing of the book, pricing and allocations are at the discretion of the Company and the Global Coordinator. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.
If any Placee defaults in paying the Placing Price in respect of any Placing Shares allotted to it, the Managers have agreed to subscribe for shares as principal, and the Company has agreed to allot or issue, as applicable, such shares to the Managers, at the Placing Price, on and subject to the terms set out in the Placing Agreement
The Placing Shares have been duly authorised and will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares (other than treasury shares which are non-voting and do not qualify for dividends), including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares after the date of issue. The Placing Shares will be issued free of any encumbrances, liens or other security interests.
The Placing will be effected by way of a placing of new ordinary shares in the Company for non-cash consideration. The Global Coordinator will subscribe for ordinary shares and redeemable preference shares in Delphinidae Finance (Jersey) Limited, a wholly owned subsidiary of the Company, for an amount approximately equal to the net proceeds of the Placing. The Company will allot and issue the Placing Shares on a non-pre-emptive basis to Placees in consideration for the transfer of the ordinary shares and redeemable preference shares in Delphinidae Finance (Jersey) Limited that will be issued to the Global Coordinator.
The Company will apply to the Financial Conduct Authority (the "FCA") for admission of the Placing Shares to the premium listing segment of the Official List of the UK Listing Authority (the "Official List") and to London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Placing Shares on its Main Market ("Admission"). It is expected that Admission will become effective at 8.00 a.m. on 8 July 2019 (or such later date as may be agreed between the Company and the Global Coordinator). The Company will also apply to the Tel Aviv Stock Exchange for the listing of the Placing Shares.
scale down any bids for this purpose on such basis as it may determine. The Managers may also, notwithstanding paragraphs 2 and 3 above and subject to the prior consent of the Company, (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time. The acceptance of offers shall be at the absolute discretion of the Global Coordinator.
The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The Managers' obligations under the Placing Agreement are conditional on certain conditions, including:
If: (i) any of the conditions contained in the Placing Agreement, including those described above, are not fulfilled or (where applicable) waived by the Global Coordinator (on behalf of the Banks) by the relevant time or date specified (or such later time or date as the Company and the Global Coordinator (for and on behalf of the Banks) may agree); or (ii) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by it in respect thereof.
The Global Coordinator (for and on behalf of the Banks) may, at its discretion waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement save that the above conditions relating, inter alia, to Admission taking place and the Company allotting and/or issuing, as applicable, the Placing Shares may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
None of the Managers shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision it may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Global Coordinator.
By participating in the Bookbuild, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described above and under "Termination of the Placing Agreement" below, and will not be capable of rescission or termination by the Placee.
The Global Coordinator (for and on behalf of the Banks) is entitled, at any time before Admission, to terminate the Placing Agreement in accordance with its terms in certain circumstances, including, if: (i) there has been a breach by the Company of any of the warranties or undertakings contained in the Placing Agreement or an event has occurred or matter has arisen which would have rendered any of the warranties untrue, inaccurate or misleading in any respect; (ii) in the opinion of the Global Coordinator (acting in good faith and in consultation with the Company), there has been a material adverse change in or affecting, or any development reasonably likely to result in a material adverse change in or affecting, the condition (whether financial, operational, legal or otherwise) or earnings, business affairs or prospects of either the Group (taken as a whole) or the Target Group (taken as a whole); or (iii) the application for Admission is withdrawn or refused by the FCA or the London Stock Exchange.
By participating in the Placing, Placees agree that the exercise by the Global Coordinator of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Company or the Global Coordinator or for agreement between the Company and the Global Coordinator (for and on behalf of the Banks) (as the case may be) and that neither the Company nor the Global Coordinator need make any reference to, or consultation with, Placees and that neither they nor any of their respective affiliates, agents, directors, officers or employees shall have any liability to Placees whatsoever in connection with any such exercise.
No offering document, prospectus or admission document has been or will be prepared or submitted to be approved by the FCA (or any other authority) in relation to the Placing, and Placees' commitments will be made solely on the basis of publicly available information taken together with the information contained in this Announcement, and any Exchange Information (as defined below) previously published by or on behalf of the Company simultaneously with or prior to the date of this Announcement and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.
Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement, the Investor Presentation and the publicly available information released by or on behalf of the Company is exclusively the responsibility of the Company and confirms to the Banks and the Comapny that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company (other than publicly available information) or the Banks or their respective Affiliates or any other person and none of the Banks or the Company, or any of their respective Affiliates or any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude or limit the liability of any person for fraudulent misrepresentation by that person.
The Company has undertaken to the Banks that, between the date of the Placing Agreement and 90 days after the Closing Date, it will not, without the prior written consent of the Global Coordinator (such consent not to be unreasonably withheld or delayed) enter into certain transactions involving or relating to the Ordinary Shares, subject to certain carve-outs agreed between the Banks and the Company.
By participating in the Placing, Placees agree that the exercise by the Global Coordinator of any power to grant consent to waive the undertaking by the Company of a transaction which would otherwise be subject to the lock-up under the Placing Agreement shall be within the absolute discretion of the Global Coordinator and that they need not make any reference to, or consultation with, Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise of the power to grant consent.
Settlement of transactions in the Placing Shares (ISIN: GB00BG12YO42) following Admission will take place within the relevant system administered by Euroclear UK & Ireland Limited ("CREST"), using the delivery versus payment mechanism, subject to certain exceptions. Subject to certain exceptions, the Managers and the Company reserve the right to require settlement for, and delivery of, the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not practicable in CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.
Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Managers and settlement instructions. Placees should settle against CREST ID: 50703. It is expected that such contract note will be despatched on 4 July 2019 and that this will also be the trade date.
Prior to the allocation of the Placing Shares, each Placee shall be required to execute an Investor Representation Letter, to be circulated to each prospective Placee by the releant Manager during the Bookbuild. The allocation of the Placing Shares to each Placee shall be conditional on receipt by the relevant Manager of an Investor Representation Letter, duly executed by such Placee.
Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with the relevant Manager.
The Company will deliver the Placing Shares to a CREST account operated by Morgan Stanley as agent for the Company and Morgan Stanley will enter its delivery (DEL) instruction into the CREST system. Morgan Stanley will hold any Placing Shares delivered to this account as nominee for the Placees. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.
It is expected that settlement will be on 8 July 2019 on a T+2 basis in accordance with the instructions given to the Managers.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Global Coordinator.
Each Placee agrees that, if it does not comply with these obligations, the Managers may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Company's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and shall be required to bear any stamp duty, stamp duty reserve tax or other stamp, securities, transfer, registration, execution, documentary or other similar impost, duty or tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject to as provided below, be so registered free from any liability to UK stamp duty or UK stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax (together with interest and penalties) is payable in respect of the issue of the Placing Shares, neither the Managers nor the Company shall be responsible for the payment thereof.
By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Managers (in their capacity as Joint Bookrunners (if applicable) and as placing agents of the Company in respect of the Placing) and the Company, in each case as a fundamental term of its application for Placing Shares, the following:
or on behalf of the Company, including, without limitation, any Exchange Information, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or any information previously published by or on behalf of the Company or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire the Placing Shares is contained in this Announcement and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has neither received nor relied on any other information given or investigations, representations, warranties or statements made by the Banks or the Company and none of the Banks or the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and that none of the Banks or any of their Affiliates have made any representations to it, express or implied, with respect to the Company, the Placing and the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information, and each of them expressly disclaims any liability in respect thereof. Nothing in this paragraph or otherwise in this Announcement excludes the liability of any person for fraudulent misrepresentation made by that person;
person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) and will honour such obligations;
Placing is on the basis that it is not and will not be a client of the Banks and that the Banks do not have any duties or responsibilities to it for providing the protections afforded to their respective clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of the Banks' rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares, (ii) it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of participating in, and is able to sustain a complete loss in connection with, the Placing, (iii) it has relied on its own examination, due diligence and analysis of the Company and its Affiliates taken as a whole, including the markets in which the Group operates, and the terms of the Placing, including the merits and risks involved and not upon any view expressed or information provided by or on behalf of the Banks, (iv) it has had sufficient time and access to information to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the legal, regulatory, tax, business, currency and other economic and financial considerations relevant to such investment and has so conducted its own investigation to the extent it deems necessary for the purposes of its investigation, and (v) it will not look to the Company, the Banks, any of their respective Affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;
pledged or otherwise transferred except in transactions not requiring registration under the Securities Act;
The foregoing acknowledgements, agreements, undertakings, representations, warranties and confirmations are given for the benefit of the Company as well as each of the Banks (for their own benefit and, where relevant, the benefit of their respective Affiliates and any person acting on their behalf) and are irrevocable. Each Placee, and any person acting on behalf of a Placee, acknowledges that none of the Banks or the Company owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of UK stamp duty and stamp duty reserve tax relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question.
Such agreement also assumes, and is based on a warranty from each Placee, that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. Neither the Banks nor the Company are liable to bear any stamp duty or stamp duty reserve tax or any other similar duties or taxes (transfer taxes) that arise on a sale of Placing Shares, if there are any such arrangements, or any arrangements that arise subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold the Banks and/or the Company and their respective Affiliates harmless from any and all interest, fines or penalties in relation to transfer taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent.
Each Placee and any person acting on behalf of each Placee acknowledges and agrees that any of the Banks or any of their respective Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares. Each Placee acknowledges and is aware that the Banks are receiving a fee in connection with their role in respect of the Placing as detailed in the Placing Agreement.
When a Placee or person acting on behalf of the Placee is dealing with the Banks, any money held in an account with any of the Banks on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Banks money in accordance with the client money rules and will be used by the Banks in the course of its own business; and the Placee will rank only as a general creditor of the Banks.
All times and dates in this Announcement may be subject to amendment by the Banks (in its absolute discretion). The Banks shall notify the Placees and any person acting on behalf of the Placees of any changes.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
The rights and remedies of the Banks and the Company under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.
Each Placee may be asked to disclose in writing or orally to the Banks:
The following definitions apply throughout this Announcement unless the context otherwise requires:
| Acquisition | means the proposed acquisition of Edison E&P by Energean, as described in this Announcement; |
|---|---|
| Admission | means admission of the Placing Shares to the premium listing segment of the Official List and to the London Stock Exchange for admission to trading on its main market for listed securities; |
| Affiliate | has the meaning given in Rule 501(b) of Regulation D under the Securities Act or Rule 405 under the Securities Act, as applicable; |
| Announcement | means this announcement (including its appendices); |
| Banks | means Morgan Stanley, Stifel, Peel Hunt and RBC; |
| Bookbuild | means the bookbuilding process to be commenced by the Managers to use reasonable endeavours to procure placees for the Placing Shares, as described in this Announcement and subject to the terms and conditions set out in this Announcement and the Placing Agreement; |
| Circular | means the circular to be published by Energean for the purposes of convening the Energean General Meeting to consider and, if thought fit, approve the Acquisition; |
| Company | means Energean Oil & Gas plc; |
| Completion | means the completion of the Acquisition in accordance with the terms of the Purchase Agreement (and "Complete" shall be construed accordingly); |
| Conditions | means the conditions to Completion as set out in the Purchase Agreement, including those summarised at paragraph 7 of this Announcement; |
| CREST | means the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)) in respect of which Euroclear is the Operator (as defined in such Regulations) in accordance with which securities may be held and transferred in uncertificated form; |
| DTRs | means the Disclosure Guidance and Transparency Rules made by the FCA pursuant to Part VI of FSMA; |
| EBITDAX | means earnings before interest tax, depreciation, amortisation and exploration expenses; |
| Edison | means Edison S.p.A., a company incorporated under the laws of Italy; |
| Edison E&P | means Edison Exploration & Production S.p.A., a company incorporated under the laws of Italy; |
| Edison E&P Group |
means Edison E&P and Edison E&P's subsidiaries and subsidiary undertakings; |
|---|---|
| Energean | means Energean Oil & Gas plc; |
| Energean Board |
the board of Directors of Energean; |
| Energean Directors |
the directors of Energean; |
| Energean General Meeting |
means the general meeting of Energean to be convened for the purposes of considering and, if thought fit, approving the Acquisition; |
| Energean Group |
means Energean and Energean's subsidiaries and subsidiary undertakings; |
| Energean Shareholder |
means a holder of Energean Shares; |
| Energean Shares |
means ordinary shares with a nominal value of 1 pence each in the capital of Energean; |
| Enlarged Group | means the enlarged group, comprising the Energean Group and the Edison E&P Group; |
| Euroclear | means Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales; |
| FCA or Financial Conduct Authority |
means the UK Financial Conduct Authority; |
| FSMA | means the Financial Services and Markets Act 2000 (as amended); |
| Group | means the Company and its subsidiary undertakings; |
| ING | means ING Bank N.V,; |
| Investor Presentation | means the presentation prepared by (or on behalf of) Energean for use during the course of presentations to investors in connection with the Acquisition and the Placing; |
| Investor Representation Letter |
means the letter in the form set out in the Placing Agreement; |
| Joint Bookrunners | means Morgan Stanley and Stifel; |
| Last Practicable Date | 3 July 2019 (being the latest practicable date prior to the date of this Announcement); |
| Listing Rules | means the rules and regulations made by the Financial Conduct Authority under FSMA; |
| LSE or London Stock Exchange |
means London Stock Exchange plc; |
| MAR | means the Market Abuse Regulation (EU) No.596/2014; |
| Managers | means Morgan Stanley, Stifel and Peel Hunt; |
| Morgan Stanley | means Morgan Stanley & Co. International plc; |
|---|---|
| Peel Hunt | means Peel Hunt LLP; |
| Placee | means any person (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given; |
| Placing | means the placing of the Placing Shares by Morgan Stanley, Stifel and Peel Hunt for the purposes of financing the Acquisition in part, as more particularly described in paragraph 8 of this Announcement; |
| Placing Agreement | has the meaning given in paragraph 8 of this Announcement; |
| Placing Price | means the price per Ordinary Share at which the Placing Shares are placed; |
| Placing Shares | has the meaning given in this Announcement; |
| PRA or Prudential Regulation Authority |
means the UK Prudential Regulation Authority; |
| Prospectus Directive | means the Directive of the European Parliament and of the Council of the European Union 2003/71/EC, as amended (which includes any relevant implementing measure in each member state of the European Economic Area and amendments thereto, including the Directive of the European Parliament and of the Council of the European Union 2010/73/EU to the extent implemented in each member state of the European Economic Area); |
| Purchase Agreement |
means the sale and purchase agreement dated the same date as this Announcement and entered into between Energean, Energean Med Limited, and Edison; |
| Purchaser | means Energean Capital Limited, a wholly owned subsidiary of Energean; |
| Ordinary Share | means an ordinary share of £0.01 each in the capital of the Company; |
| RBC | means RBC Europe Limited (trading as RBC Capital Markets) |
| Regulation S | |
| means Regulation S promulgated under the Securities Act; | |
| Regulatory Information Service |
means any of the services set out in Appendix 3 of the Listing Rules; |
| Restricted Territory | means the United States, Australia, New Zealand, Canada, Japan, Hong Kong, Singapore or South Africa; |
| Securities Act | means the U.S. Securities Act of 1933, as amended; |
| Stifel | means Stifel Nicolaus Europe Limited; |
| subsidiary | has the meaning given to that term in the Companies Act 2006; |
| Terms and Conditions |
means the terms and conditions of the Placing set out in Appendix 1 to this Announcement; |
|---|---|
| uncertificated or in uncertificated form |
means in respect of a share or other security, where that share or other security is recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which may be transferred by means of CREST; and |
| United Kingdom or UK |
means the United Kingdom of Great Britain and Northern Ireland |
| United States or US | means the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction and any political sub-division thereof. |
Unless otherwise indicated in this Announcement, all references to "£", "GBP", "pounds", ''pound sterling'', "sterling'', "p", "penny" or ''pence'' are to the lawful currency of the UK. All references to "US\$", "\$" or "dollars" are to the lawful currency of the United States of America.
This Appendix highlights certain key risks and uncertainties associated with the Acquisition, Edison E&P and the Enlarged Group. The risks and uncertainties described in this Appendix are neither exhaustive nor listed in order of importance or likelihood. There may be additional risks and uncertainties not currently known or not currently considered material that may also have a material adverse effect on the Acquisition, the businesses of Edison E&P or the Enlarged Group and may cause the price of the shares to decline.
Energean published its 2018 Annual Report on 18 April 2019 in which Energean has set forth, at pages 58-62 under the section titled "Principal risks and uncertainties", the material existing and emerging risks it has identified to its business and an investment in the Energean Shares. This Appendix should be read in conjunction with the information included in Energean's 2018 Annual Report and Energean's other public disclosures.
in a timely manner or on commercially reasonable terms. Any such additional equity raise could result in dilution of shareholders.
Edison E&P had \$147 million of overdue receivables due from EGPC at 31 December 2018 out of total EGPC receivables at such date of \$241 million (net of a \$40 million bad debt provision): Edison E&P has receivables due from Edison's operations in Egypt which have historically been paid irregularly and after significant delay. Energean management believes that this risk is not specific to Edison E&P and affects all operators in the country, albeit total outstanding arrears to these operators in Egypt has reduced from approximately \$4.0 billion as of year-end 2016 to approximately \$1.2 billion as of year-end 2018. Particularly as a result of political unrest in Egypt beginning in 2011, the pace of payments received from EGPC has varied widely. Further, receipt of cash payments from EGPC may be subject to continued or increased delay in the future as a result of various factors, including the prevailing political and economic climate in Egypt, the availability of US dollars in Egypt and trends in international oil prices. In addition, rising oil prices and increased production have historically resulted in longer payment periods as total receivables increase, due in part to the impact of higher prices on EGPC's financial commitments to subsidise oil imports. The Enlarged Group will be further exposed to delays in and irregularities in payment from its Egyptian operations after completion of the Acquisition.
delisted from the SDBP and production resumes at Rospo Mare and Energean is also indemnified for any costs relating to the SDBP listing of the Alba Marina and the resolution of these sanctions.
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