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Italy’s Eni is considering spinning off oil and gas operations in West Africa and the Middle East into new joint ventures to help reduce debt and fund its shift to low-carbon energy, according to company and industry sources.
The move is part of a major overhaul the company launched last year as it transitions into renewables and a gradual tapering of oil and gas output.
Eni aims to replicate the success of its 2019 oil and gas spin-off in Norway, where it formed joint venture Var Energi with private equity firm HitecVision and retains a 69.6% stake.
That created Norway’s second largest oil and gas producer after acquiring Exxon Mobil’s portfolio there for $4.5 billion, giving it production of about 150,000 barrels of oil equivalent per day.
The investment has been highly profitable, paying Eni nearly $1.3 billion euros in dividends since its creation.
“The company is working on doing more of the same (as Var) with chosen partners in West Africa and the Near-Far East and Far East,” a source said without giving further detail.
Africa’s biggest foreign oil and gas producer, Eni has prize assets in Nigeria, Congo and Angola.
It has big production centers in Egypt and Libya, has rapidly built a presence in the Gulf and is looking to grow in Asia.
Creating a separate entity will allow Eni to shift some of its debt, which rose last year to 26.7 billion euros ($32.2 billion), off its balance sheet given it will no longer be consolidated at group level, the sources said.
With lower debt, Eni hopes to raise new capital to build its renewables and low-carbon business which will form the backbone of the future company.
Eni has recently held talks with several large oil and gas producers including BP and Total to merge parts of their operations in West Africa and the Middle East, sources told Reuters.
Eni, BP and Total all declined to comment.
BP and Total face challenges similar to Eni’s in terms of managing debt and low-carbon emissions but it remains unclear if the talks will be successful, the sources said.
Europe’s top energy companies were forced to raise record amounts of debt after oil and gas demand cratered in the wake of the pandemic.
Eni Chief Financial Officer Francesco Gattei in February told analysts that there are “opportunities” in business combinations like Var Energi to remove debt from Eni’s balance sheet.
“We aim to replicate our Norwegian Var model in different countries, with potential business combinations which are currently under screening,” Gattei said at the time.
Other companies have gone down the same path in recent years. BP merged its Norwegian operations with local producer Det Norske in 2016 to create Aker BP, which trades on the Oslo Stock Exchange.
Large oil companies typically prefer operating oil and gas fields, taking pride in their operational capabilities. But for Eni, which has said its oil output will start tapering off after 2025, the JV model offers a way to cut costs and squeeze more money out of the oil and gas division.
Eni, headed by veteran oilman Claudio Descalzi, is also mulling spinning off its new retail and renewable energy business next year in order to raise funds. It could list a minority stake in a unit that could be worth around 10 billion euros, according to sources.
Like its peers, Eni has set ambitious targets to slash planet-warming emissions to net-zero by 2050 while rapidly expanding its renewable power generation and biofuel capacity.
The joint ventures model offers companies a way to build a new low-carbon business centered around renewables, power trading and retail, while jettisoning legacy oil and gas businesses which will be wound down over time, a senior source close to Eni said.
The new model also offers transparency to investors regarding greenhouse gas emissions, he added.
“If you still co-own the new company, you’re still liable for the emissions. But you can report them separately which allows you to show investors how you are decarbonizing your core business,” the source said.
Source: Reuters
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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