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November 25, 2021

Neptune Energy owners explore divestment

Neptune Energy has sites in the UK and the Norwegian North Sea, and reported production of 142,000 net boe/d in 2020.

By Archana Rani

Owners of UK-based oil and gas firm Neptune Energy Group are reportedly considering divesting the firm in a deal that could be worth up to $5bn.

Neptune was established by Sam Laidlaw in 2015. The firm is backed by the CIC and its funds are advised by Carlyle Group and CVC Capital Partners.

Financial advisers to CVC and Carlyle have sought bids next month from parties interested in the takeover, reported Bloomberg, citing people familiar with the matter.

While negotiations are ongoing, the owners of the energy firm may also consider listing it as a possible option and may even decide against the divestment plan itself, according to the sources.

Although the executives of Neptune earlier indicated that they were preparing for an IPO, the listing of energy firms has been uncommon as valuations have not increased inline with the surging prices of commodities.

In an earnings call held earlier this month, Laidlaw said: “We are going to need to see that those multiples improve, and that will probably take several quarters of cash flows, improved dividends, and improved investor confidence.”

The firm had reported an underlying operating profit of $393.3m in the third quarter of 2021, which is an increase from the $15.7m recorded during the same period of 2020.

In September, Bloomberg News reported that Neptune was exploring options for its business and was working with Rothschild, JPMorgan Chase and Goldman Sachs Group.

People familiar with this development have said that the firm has been considering a possible merger with competitor Harbour Energy that could create a new entity with a total worth of around $10bn.

With operations in Germany, Egypt, Indonesia, the Netherlands and Algeria, and a presence in the UK and the Norwegian North Sea, the company reported a production of 142,000 net barrels of oil equivalent per day (boepd) in 2020.

Earlier this year, Neptune Energy and the Environmental Defense Fund collaborated to use drones to measure methane emissions from offshore oil and gas facilities.

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