Neptune is a leading independent exploration and production company with a world-class portfolio of gas-oriented assets and operations in Western Europe, North Africa, Indonesia and Australia. The portfolio is competitive in terms of cost and low in operational emissions. Neptune was founded in 2015 by Sam Laidlaw and is currently owned by China Investment Corporation, funds advised by Carlyle Group and CVC Capital Partners, and certain management owners.
Eni will acquire assets comprising Neptune’s entire portfolio other than its operations in Germany and Norway (the “Neptune Global Business”) (the ‘’Eni transaction’’). The German operations will 
be carved out prior to the Eni transaction and the Norwegian operations (the Neptune Norway Business’’), will be acquired by Vår directly from Neptune under a separate share purchase agreement (the “Vår transaction”) (the Eni transaction and the Var transaction together comprising the “transaction”).
The Vår transaction will close immediately prior to the Eni transaction with the proceeds from the Norway sale remaining with the Neptune Global Business purchased by Eni. Vår is a company listed on the Oslo Stock Exchange and is 63% owned by Eni.
Under the agreed terms, the Neptune Global Business will have an Enterprise Value of c.$2.6bn, while the Neptune Norway Business will have an Enterprise Value of c.$2.3bn. As of 31 December 2022, net debt of the Neptune Global Business, pro 
forma for the sale of the Neptune Norway Business, was c.$0.5bn. The final net consideration for both transactions will be subject to customary closing adjustments and will be paid in cash at completion. The Eni transaction will be funded through available liquidity.
The transaction represents an exceptional fit for Eni. It complements Eni’s key areas of geographic focus and supports its objective of increasing the share of natural gas production to 60%, and reaching net zero emissions (Scope 1+2) from the Upstream business by 2030. The transaction aligns with Eni’s strategy of providing affordable, secure and low carbon energy to society, for which natural gas remains an important source. The transaction is also consistent with Eni’s operating and financial framework, as well as the targets set out in Eni’s 2023-2026 Plan, delivering earnings and cashflow accretion, additional shareholder value and remuneration upside.
Specifically, the transaction has the following benefits:
- As of 31 December 2022, reported 2P reserves of c.484 million boe of which c.386 million boe are net to Eni’s portfolio[1], and of which c. 80% is natural gas. The transaction equates to a 2P acquisition cost of $10.1/boe. In addition, there is significant additional contingent resource upside.
- For the year ended 31 December 2022, Neptune reported revenues of c.$1.22bn and EBITDAX of c.$0.95bn for the Neptune Global Business.
- The transaction will add around 130 kboed[2] to the Eni and Var portfolios. From this, Eni estimates the transaction will add more than 100 kboed of low emission production1 over 2024-2026, of which more than 70% will be natural gas (compared to 53% for Eni in 2022), with almost all of that amount capable of supplying OECD markets via pipeline or LNG.
- Eni expects to generate G&A and industrial synergies to a value of over $0.5bn, with additional cost synergies, exploration and development including more CCS, financial and midstream value upside potential.
- The transaction is expected to be immediately accretive to earnings and CFFO per share, as well as free cashflow positive. It is also consistent with the 2023-2026 Plan presented in February 2023, in particular the guidance of:
- €1bn net positive contribution from portfolio activities over the period
- €37bn of organic capex over the period
- Leverage within a 10% to 20% range
- Achieving 2023-26 production CAGR of 3-4% predominantly through organic investment plus the net impact of inorganic high-grading activities. This will see Eni integrate new assets that deliver additional value, while divesting others as it restructures and simplifies its portfolio.
Commenting on the transaction, Eni’s CEO, Claudio Descalzi, said ‘’This transaction delivers to Eni a high-quality and low carbon intensity portfolio with exceptional strategic and operational complementarity. Eni sees gas as a critical bridge energy source in the global energy transition and is focused on increasing the share of its natural gas production to 60% by 2030. Neptune will contribute predominantly gas resources to Eni’s portfolio. Moreover, the geographic and operational overlap is striking, adding scale to Eni’s majority-owned Vår Energi; bringing more gas production and CCUS opportunities to the remaining North Sea footprint; building on Eni’s leading position in Algeria – a key supplier to European gas markets; and deepening Eni’s presence in offshore Indonesia, supplying the Bontang LNG plant and domestic markets.
We also expect the added supply to provide further optimization opportunities for Eni’s GGP operations. Indeed, we see the transaction adding around 4 Bcm of gas supply for European consumers. A critical element of the transaction is also the low-cost supply and accretive cashflow it provides to Eni. It therefore supports our commitment to an attractive and resilient dividend and adds to the potential for share buybacks that make up the balance of the 25-30% of CFFO we have committed to distribute. The nature and challenges of the energy transition require a focused response and in particular this transaction highlights two important aspects of Eni’s financial strategy – the flexibility and optionality that our strong liquidity and low balance sheet leverage offer; and our innovative satellite model which helps to align and access dedicated capital.”
