Asset A&D

NEO Renegotiates Terms for Acquisition of TOTAL's UK North Sea Assets

By Deepak Sharma
May 21, 2020
a minute read

NEO E&P Ltd., a UK-based E&P company backed by Norwegian private equity firm HitecVision AS, has renegotiated the terms of a deal with Total S.A. originally signed in mid-2019 to acquire the French company’s UK North Sea assets.

In July last year, Total had signed an agreement with NEO and Petrogas E&P LLC, the E&P arm of Oman-based conglomerate MB Holdings, to divest its interests in the assets for a total consideration of US$635 million. Petrogas subsequently withdrew from the transaction.

The acquisition includes a material, cash generative portfolio of assets in four producing areas of the UK North Sea, which had average daily production of approximately 23,000 barrels of oil equivalent per day (boe/d) during 2019 and substantial development upside. The assets will add reserves of 51 million barrel of oil equivalent (MMboe) to NEO’s portfolio.

“Reflecting recent significant market volatility, NEO, HitecVision and Total have renegotiated the financial terms of the deal to respond to the current environment,” said HitecVision in a statement without giving away details on the pricing of the revised deal. The statement revealed that the structure of the consideration and phasing of payments have been modified, including vendor financing and earn-out arrangements.

Commenting on the deal, Jean-Pierre Sbraire, Total’s Chief Financial Officer said that the “agreed revisions respond to current market conditions while retainingthe majority of the value of the transaction.”

The completion of the transaction remains subject to regulatory approvals, and is expected to close by Q3-2020.

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