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After two years of hunting, Sam Laidlaw has finally bagged his prey.
Neptune Oil & Gas, the London-based company run by the former Centrica chief executive, agreed on Thursday to buy the exploration and production assets of France’s Engie for $3.9bn.
The long-awaited deal will absorb most of the $5bn war chest that Mr Laidlaw was armed with by Carlyle Group and CVC Capital Partners when Neptune was set up by the US private equity groups in 2015.
China Investment Corporation, the Chinese sovereign wealth fund, is expected to translate its existing 30 per cent stake in Engie’s oil and gas portfolio into a 49 per cent stake in Neptune as part of the transaction, although this was not confirmed in Thursday’s announcement.
Engie’s upstream oil and gas business includes 319 exploration and production licences in 12 countries stretching from the UK and Norway to Algeria and Indonesia.
The business employs over 1,600 people and had average daily equity production of 148,000 barrels of oil and oil equivalent last year. It has proven and probable reserves of 672.4m barrels.
In the North Sea, Engie operates the Cygnus field responsible for about 5 per cent of UK gas production in a partnership with Centrica, which Mr Laidlaw ran between 2006 and 2014.
Engie said it had received a “firm and binding offer” from Neptune for its 70 per cent share of the exploration and production business and would now enter exclusive negotiations to finalise the sale.
The group, 29 per cent owned by the French state, said the total value of the deal was worth €4.7bn with the inclusion of €1.1bn of decommissioning liabilities to be taken on by Neptune and €90m of contingent payments dependent on operational milestones.
Engie would keep a 30 per cent interest in the Touat gas project in Algeria following the deal.
Isabelle Kocher, Engie chief executive, said the deal was a “major milestone” in the group’s transformation towards cleaner energy and services and away from upstream energy production and generation.
“This intended transaction is in line with Engie’s strategy to be leader of the energy transition in the world, notably by focusing on low carbon generation and reducing our exposure to commodity prices. After the closing of this transaction, regulated and contracted activities will represent more than 85 per cent of Engie’s Ebitda, thus enabling us to already achieve the objective set for 2018 and to improve our risk profile.”