Kerogen Capital (Kerogen) is to sell Zennor Petroleum Limited (Zennor) to NEO Energy Upstream UK Limited (NEO) and HitecVision for a total consideration of up to USD625 million, including deferred and contingent payments.
The transaction completion is subject to customary regulatory approvals.
Since Kerogen’s initial investment in 2015, Zennor has transformed from an early-stage exploration company into a full-cycle E&P player in the UK North Sea through successful appraisal and development of the Finlaggan field, two separate producing asset acquisitions and multiple licence awards in the offshore licensing rounds. In January 2021 Zennor and Kerogen announced its Net Zero Carbon Strategy.
Zennor’s deep technical expertise and entrepreneurial spirit enabled it to successfully identify attractive opportunities and create material value by delineating and significantly expanding its reserves and resources base, by implementing commercial and operational optimisation initiatives, and by successfully executing accretive bolt-on acquisitions. The Zennor team will be integrated into the NEO business at completion.
Zennor has been a very active and collaborative partner working closely with other operators in the UK North Sea to maximise the recovery of high value barrels and unlocking future growth opportunities.
Today, Zennor’s portfolio of c40 mmboe of net 2P reserves and more than 90 mmboe of net 2C resources is comprised of non-operated interests in the Mungo & Monan, Britannia, Bacchus and Cormorant East producing fields, a 100% operated interest in its flagship Finlaggan development project and interests in several near-field discoveries. Zennor’s net production is expected to exceed 20,000 boepd in Q4 2021, once Finlaggan is onstream.
Kerogen and Zennor were advised on the sale by Citigroup Global Markets Limited as their financial advisor and CMS Cameron McKenna Nabarro Olswang LLP as their legal advisor.
Jason Cheng, CEO and Managing Partner of Kerogen Capital, says: “Together with the Zennor team, we have built a portfolio of long-life, high-margin assets with significant further growth potential. With the Finlaggan development nearly complete, we believe this is an opportune time to monetise our investment and realise an attractive outcome for our investors, while leaving room for NEO to deliver the next phase of portfolio growth in synergy with their existing assets.
“We deeply value the relationship developed with the Zennor team over the past years and we wish them every success going forward as part of the NEO organisation where, we are confident, they can continue to deliver growth at a larger scale.”
Martin Rowe, Managing Director of Zennor Petroleum, says: “We are pleased to be able to deliver an attractive return for our shareholders and we would like to thank Kerogen for their support over the last fove years. Our relationship with Kerogen has been very collaborative and their support in strategic, financial and technical matters has been instrumental in growing Zennor’s business. We are excited to see our joint efforts culminating in a successful monetisation of Zennor’s portfolio in a transaction with one of the leading players in the UK North Sea.
“This transaction is a testament to the knowledge, experience, and hard work of the Zennor team that I have had the privilege to work with over these past years. The portfolio of high-quality assets that this team has identified and secured is the reason we have been able to deliver this transaction. Their ability is further amplified by the fact that the Zennor team will be integrated into the NEO business at completion. I would also like to thank our lenders, the OGA, our key contractors and our license partners and operators for their ongoing support in developing and growing our portfolio.”
