NEO Energy Group Ltd. and Repsol Resources UK Ltd. have completed their combination, touting the resulting company as one of the biggest producers on the United Kingdom continental shelf (UKCS).
The combined entity, NEO NEXT Energy Ltd., is 55 percent owned by European energy investor HitecVision and 45 percent by Repsol E&P Group. Repsol E&P is 75 percent owned by Spanish integrated energy company Repsol SA and 25 percent owned by the United States’ EIG Global Energy Partners.
“This equity split reflects the contributions and strategic alignment of both parties in the creation of a market-leading entity in the UKCS, with a projected 2025 production of approximately 130,000 barrels of oil equivalent per day”, Repsol said in a statement online announcing completion.
According to the announcement of the deal in March, Repsol Resources UK owns stakes in 48 producing and non-producing oil and gas fields, while NEO’s portfolio in UK waters includes Penguins, Culzean, Gannet, Shearwater, Britannia Area and Elgin Franklin.
NEO NEXT will operate 11 production hubs and “substantial undeveloped reserves”, the companies said March.
“This combination creates a jointly governed business which will call upon the key strengths of both shareholders”, Francisco Gea, executive managing director for exploration and production at Repsol, said in comments for the closure of the transaction. “Repsol contributes operational capabilities on production, development and decommissioning activities which will be combined with NEO Energy expertise on financial and commercial matters.
“We believe this combined business has many more opportunities for profitable growth in the basin and beyond”.
NEO NEXT chief executive John Knight said, “Our strategy can be summarized as ‘Resilience, Yield and Growth’: the combined company has much more scale and diversity and opportunities for cost consolidation and portfolio high-grading, giving resilience despite the tough conditions in the UK”.
“The benefits of synergies from consolidation will create much stronger value creation, profit and cash flow yield for shareholders and more options for capital allocation decisions well into the next decade”, Knight added.
“But this company will also be very well positioned to choose both organic and inorganic growth. We will certainly look to be making more value accretive acquisitions”.
NEO NEXY targets over $1 billion in synergies, the companies said March.
Repsol E&P has committed up to a nominal amount of $1.8 billion for decommissioning activities. The amount represents about 40 percent of decom liabilities related to its legacy assets. “Repsol E&P will continue to provide decommissioning security for existing Repsol E&P legacy assets”, the March statement said.
To contact the author, email jov.onsat@rigzone.com
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