NEO Energy to buy assets of JX Nippon UK for £ 1.2bn deal

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NEO Energy buys JX Nippon E&P UK, the British firm of Japanese holdings ENEOS, for £ 1.2 billion in the latest in a series of North Sea acquisitions.

JX UK owns untapped interests in several producing fields and associated infrastructure in the British North Sea, including a 20% interest in the Mariner field and an 18% interest in the Culzean field.

The transaction excludes JX UK’s interests in the Andrew area, which consist of untapped stakes in the Andrew, Farragon and Kinnoull fields, which BP is said to be in talks to acquire.

The purchase price is based on a valuation of the company from March 2021 at $ 1.655 billion (£ 1.24 billion) after adjusting for debt and working capital.

The transaction is subject to regulatory approval.

JX Nippon, whose parent company is Tokyo-headquartered oil and metals conglomerate ENEOS Holdings, said it was preparing to sell out of the North Sea in May this year.

Commenting on Operation NEOHiroshi Hosoi, President and CEO of JX, said the transaction was part of the company’s ongoing global portfolio management strategy, in which it would strengthen its upstream portfolio by selling projects that “are not more critical “for the company.

“In line with this strategy, we have decided to sell our UK business to NEO, an upstream emerging company,” he said.

The deal is the latest of several acquisitions launched by NEO, a private equity firm, formed in October 2019 when private equity group Hitec Vision merged its North Sea-focused investment vehicles Neo E&P and Verus Petroleum, based in Aberdeen.

In 2020, the company purchased a set of assets from Total under a £ 485million deal, which included stakes mined in the Dumbarton, Balloch, Lochranza, Drumtochty, Flyndre, Affleck and Cawdor fields. , and untapped interests in Golden Eagle, Scott and Telford, managed by the Chinese firm Cnooc.

In August, it finalized the acquisition of privately-backed rival Zennor Petroleum, bringing its daily production to around 80,000 barrels of oil equivalent per day (bepd) for 2021.

More recently, the regulator, the Oil and Gas Authority (OGA), said it would open an investigation into Esso’s proposed sale of 13 producing fields to NEO, fearing the deal would not progress quickly enough.

Earlier this week, it was also revealed that a partner in the Brae field operated by Taqa, in which JX UK also has a 6.3% stake, had breached its decommissioning responsibility.

Energy Voice reported that Fujairah Oil and Gas, controlled by the emirate of the same name of the United Arab Emirates, was not reimbursing its share of the total costs, estimated at some $ 1.8 billion. Fujairah bought Viaro Energy’s shares in the Brae Metropolitan Area (GBA) for $ 1 (75 pence) in 2020 and now has a 40% stake.

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