Delek Group, Ithaca Energy Close Acquisition of Chevron North Sea.
11 November 2019 - Israeli conglomerate Delek Group's (TASE: DLEKG) (OTC: DGRLY) subsidiary, North Sea oil and gas company Ithaca Energy Ltd, has closed the acquisition of US-based oil and gas major Chevron's (NYSE: CVX) Chevron North Sea Ltd business for USD 2bn, the group said.
The transaction will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the company, resulting in an approximately 150% increase in the proven and probable reserves of the company and a 300% increase in forecast 2019 production.
Pro-forma the transaction, Ithaca's asset base is estimated to consist of 2P reserves of approximately 225m barrels of oil equivalent plus a further 45 MMboe2 of proven and probable contingent resources associated primarily with additional near-field development and infill drilling opportunities.
The enlarged portfolio, encompassing 18 producing field interests in total, is forecast to deliver pro-forma 2019 production of approximately 80,000 barrels of oil equivalent per day (60% liquids) at an operating cost of approximately USD 17 per barrel of oil equivalent.
As part of the transaction approximately 500 employees will transfer to the company, of which around 200 work offshore on the operated assets.
With the addition of the high quality, long life assets that characterise the CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of the company and establishes Ithaca as the second largest independent oil and gas producer in the UK North Sea.
The transaction provides a material step up in the scale and breadth of the company's producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cashflows of the business and enables accelerated monetisation of Ithaca's existing USD 2.2bn of UK tax allowances.
Taking into account the interim period cashflows that are forecast to be generated by CNSL from the effective date, it is anticipated that the price payable at completion will be around USD 1.65bn, subject to adjustments for the transfer of working capital.
Ithaca is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group Ltd., Israel's largest integrated energy company.
The acquisition will be funded through an upsized USD 1.65bn Reserve Based Lending senior debt facility, a USD 700m acquisition debt financing facility, an equity investment by Delek and existing cash resources of the company.
Ithaca's existing USD 300m term loan and associated Delek guarantees will be retired as part of this refinancing.
Ithaca's strategy is centred on building a profitable, leading North Sea oil and gas company. The company is an experienced North Sea operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries and the exploitation of its UK producing asset portfolio.
The company was founded in 2004 and has grown through the execution of both new field development activities and acquisitions. Ithaca is a wholly owned subsidiary of the Tel Aviv stock exchange listed Delek Group Ltd. (TASE: DLEKG, US ADR: DGRLY), Israel'sleading integrated energy company.
JP Morgan is acting as financial adviser to the company in relation to this transaction. The RBL facility has been fully underwritten by BNP Paribas and the acquisition debt financing has been jointly underwritten by JP Morgan and BNP Paribas.
Sector: Petroleum/Natural Gas/Coal
Target: Chevron North Sea Ltd
Buyer: Ithaca Energy Ltd
Deal size in USD: 2bn
Type: Corporate Acquisition
Buyer advisor: JP Morgan , ,
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|Publication:||M & A Navigator|
|Date:||Nov 11, 2019|
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