Tenaz Energy Corp has entered into an agreement with Nederlandse Aardolie Maatschappij B.V. ('NAM'), a 50/50 joint venture between Shell and ExxonMobil Corporation, to acquire all of the issued and outstanding shares of NAM Offshore B.V. ('NOBV') for base consideration of €165 million ($246 million), prior to closing adjustments and contingent payments. The transaction has an effective date of January 1, 2024 and is expected to close mid-2025 following statutory merger clearances and operational transition activities.
NOBV is expected to produce nearly 11,000 boe/d1 (99% TTF2 natural gas) and generate approximately €90 million ($134 million) of free cash flow based on current strip prices in 2024. NOBV’s cash flow profile is underpinned by a combination of physical fixed-price and collar hedges for 2024 through 2026.
Closing of the Acquisition will be funded through a combination of interim free cash flow between the Effective Date and closing, a €23 million ($34 million) deposit paid to NAM, cash on hand, and available capacity under a new credit and delayed draw term loan facility with National Bank of Canada ('NBC'). Our current estimate of required cash-to-close is approximately €30 million ($45 million) assuming a mid-year closing date.
Transaction Attributes
- Delivers on M&A Strategy: We acquire a high margin, low-decline asset base with high-capacity infrastructure, low risk development opportunities and future exploration upside. The Acquisition’s financing structure avoids dilution and maximizes value for existing shareholders.
- Transformational Scale: On a pro forma basis3, the transaction adds approximately 11,000 boe/d1 (99% gas) of production and 53.6 million boe of Total Proved + Probable (“2P”) reserves. The Acquisition results in a 3.9x increase in corporate production, a 3.7x increase in 2P reserves, and 6.2x increase in 2P reserve value.
- Significant North Sea Operating Position: Upon closing, Tenaz will become the second largest operator in the Dutch North Sea (“DNS”). NOBV production accounts for approximately 20% of gas production in the DNS and is 87% operated by NOBV.
- Robust Free Funds Flow Profile: The acquired assets are expected to generate over €90 million of free cash flow in 2024. Cash flows are significantly protected by fixed price hedging contracts on 46% of production from 2024 through 2026 at an average fixed price of €38.79/MWh ($16.94/MMbtu). The cash flow profile creates significant go-forward capital allocation flexibility with respect to return of capital, low-risk development opportunities, and high-impact exploration prospects.
- Appropriate Transaction Structure and Financing: The combination of high interim period cash flow and contingent payment structure drives down cash consideration at close and reduces risk to Tenaz. The transaction structure aligns potential contingent payments with realization of further value for Tenaz shareholders. Tenaz expects to fund the cash purchase price from existing liquidity and new non-dilutive capital to maximize value for existing shareholders. The Acquisition is expected to generate significant accretion in all key metrics, including production, reserves, cash flow, free cash flow and net asset value per share.
Anthony Marino, President & CEO of Tenaz, stated: 'This acquisition is an important step in our strategy of securing value-enhancing acquisitions that have substantial organic investment opportunities. We welcome NOBV’s workforce of highly skilled and experienced professionals who will be critical to the continued success of Tenaz. We are delighted to invest in the revitalization and sustainability of the Netherlands energy industry, and we look forward to establishing our Dutch headquarters near the existing NOBV office in the Netherlands.'
Click here for full announcement
Source: Tenaz Energy
