Narrative
Full Description
Project narrative
On May 11, 2017, a syndicate of lead banks banks entered into a $2.000 billion USD revolving reserves-based lending facility (RBL) agreement with certain subsidiaries of Neptune Energy Group Limited (NEGL) — an England and Wales-incorporated London-based oil and gas vehicle owned by Carlyle International Energy Partners LP of the Carlyle Group and CVC Fund VI of CVC Capital Partners — to support Neptune Energy's acquisition of a 70% stake in France-based ENGIE E&P International S.A. (EPI). Syndication was then launched in summer 2017. On February 15, 2018, financial close was reached on the loan with a syndicate of 21 banks — including the Bank of China (BOC) — providing the $2 billion USD RBL agreement with NEGL to support the acquisition. This loan carried a maturity period of six years and two months (6.166 years) from financial close and a final maturity date of May 11, 2024. The loan was repayable in line with the amortization of bank commitments from April 1, 2020 to the final maturity date of May 11, 2024 or time determined by the remaining reserves of the assets; however, the first loan repayment date was in 2021. This loan was multi-currency revolving facility and carried interest rates based on USD or GBP LIBOR, EURIBOR, or NIBOR plus an applicable margin depending on the currency. Furthermore, the maximum amount that the relevant subsidiaries could draw down under this facility was subject to a consolidated cash flow and debt service projection, reviewed in March and September, which would redetermine the available size of the facility based on the most up-to-date forecast of the RBL group’s production. This loan was secured by (i.e. collateralized against) over the shares of certain companies within the RBL group and certain of their oil and gas assets. BOC committed $125.00 million AUD to the loan syndicate. Record ID#101616 captures BOC's contribution. In addition to BOC, the following lenders contributed the respective amounts to the loan syndicate: ABN AMRO Bank N.V. ($82.00 million USD), Australia and New Zealand Banking Group (ANZ) ($72.50 million USD), BMO Capital Markets ($72.50 million USD), BNP Paribas S.A. ($125.00 million USD), Citibank N.A. ($125.00 million USD), Commonwealth Bank of Australia (CBA) ($72.50 million USD), Deutsche Bank ($125.00 million USD), DNB ASA ($125.00 million USD), Goldman Sachs Group Inc. ($15.00 million USD), HSBC Bank ($125.00 million USD), ING Bank N.V. ($125.00 million USD), JPMorgan Chase Bank N.A. ($125.00 million USD), Lloyds Bank ($72.50 million USD), Morgan Stanley ($5.00 million USD), Natixis ($125.00 million USD), RBC Europe Limited ($125.00 million USD), Royal Bank of Scotland (RBS) ($54.00 million USD), the Bank of Nova Scotia (Scotiabank) ($125.00 million USD), Société Générale S.A. (SocGen) ($125.00 million USD), and Sumitomo Mitsui Banking Corporation (SMBC) ($54.00 million USD). BNP Paribas, Citibank, HSBC, ING, Natixis, and SocGen served as the original mandated lead arrangers and bookrunners. BOC, Deutsche Bank, DNB, JPMorgan, RBC Europe Limited, and Scotiabank served as mandated lead arrangers and bookrunners. ABN AMRO Bank, ANZ, BMO Capital Markets, CBA, Goldman Sachs, Lloyds, Morgan Stanley, RBS, and SMBC joined in syndication. Syndication later brought the total lender count to 29. EPI was the holding company for ENGIE's global exploration and production business. The EPI portfolio included North Sea operations in Norway, such as operatorship of Gjøia field, the United Kingdom via operatorship of the Cygnus gas field, and the Netherlands such as the L5 block, onshore German operations such as Römerberg oil field, the Jangkrik LNG project in Indonesia, the Touat gas development in Algeria (of which ENGIE retained a 30% interest in, with Neptune as operator), and the Bonaparte development in Australia. In total, EPI operated 60 producing oil and gas fields with a daily production of 154,000 barrels of oil equivalent in 2017 and proven and probable reserves of 672 million barrels of oil equivalent units. On May 11, 2017, Neptune Energy signed an exclusivity agreement to purchase a 70% stake in EPI from ENGIE Group for $3.9 billion USD, also including €1.1 billion EUR ($1.2 billion USD equivalent in May 2017; $1.37 billion USD in February 2018) of liabilities for decommissioning being deconsolidated from ENGIE’s balance sheet and deferred contingent payments of approximately €90 million EUR linked to certain operational milestones. Then, on September 22, 2017, Neptune Energy signed the formal purchase contract with ENGIE with the purchase of a 70% stake in EPI. Chinese state-owned sovereign wealth fund China Investment Corporation (CIC) owned 30% of EPI; it would join the Neptune Energy vehicle to retain its ownership and expressed interest in increasing its shareholding in it. On February 15, 2018, Neptune completed the acquisition of a 100% stake in EPI, including the 30% stake held by CIC; CIC then became a shareholder of Neptune Energy Group Limited. CIC held a 49.0% stake in Neptune Energy, while Carlyle Group held a 30.6% stake and CBC Capital Partners held a 20.4% stake. Neptune's shareholders planned an initial public offering (IPO) of the company within five years of the acquisition. Per the loan agreement, from March 31, 2018, the available size of the facility was $1.428 billion USD until September 30, 2018, when it was increased to $1.795 billion USD, then reduced from October 1, 2018 to $1.725 billion USD. Then, when newly-acquired VNS Norge AS joined the facility as a borrower in after the completion of its acquisition in September 2018, the facility limit was increased to $1.981 billion USD. At March 2019, the facility limited was increased to $1.996 billion USD. As of December 31, 2018, total drawings under the facility were $1.000 billion USD. As of December 31, 2019, total drawings under the facility were $690 million USD. In the first half of 2020, Neptune Energy and the banking syndicate entered into an amendment agreement on the RBL; Merakes, Indonesia and Touat, Algeria were added to the borrowing base, which increasing its $2.0 billion USD borrowing base to $2.3 billion USD for the next 12 months; the borrower exercised the accordion option to up-size the loan to $2.6 billion USD. Bank of China’s contribution is recorded in Record ID#110935. The first scheduled repayment was extended to 2022 (a grace period extension of one year) with a delay in the first scheduled repayment from 2021 to 2022. Record ID#101649 captures this extension. On September 28, 2020, Neptune made an early repayment on a $237 million USD vendor loan for its Touat asset, funded by $26 million USD of cash and the remaining $211 million USD drawn under the RBL facility, which, by virtue of early repayment increased the borrowing base and available liquidity under the RBL facility by $275 million USD. As of December 31, 2020, total drawings under the facility were $1.070 billion USD. In 2021, during the March 2021 redetermination period, the borrowing base remained at $2.3 billion USD. However, Neptune Energy and the lenders amended the RBL agreement to only allow for USD drawdowns with USD LIBOR plus an applicable margin as the interest rate. As of December 31, 2021, total drawings under the facility were $1.360 million USD. As of December 31, 2022, total drawings under the facility were $1.100 billion USD. In June 2023, a syndicate of banks entered into a six-year $1.3 billion USD borrowing base RBL loan agreement with Neptune Energy to refinance the existing RBL loan; this new loan excluded Neptune Energy's German assets, which it planned to finance separately. Furthermore, in June 2023, Eni International entered into a sale and purchase agreement to acquire Neptune Energy Group and Neptune Energy Norge for an aggregate consideration of $4.6 billion USD. This acquisition excluded Neptune's German assets which would remain owned and operated by Neptune Energy's existing shareholders. The acquisition was completed on January 31, 2024.
Staff comments
1. BOC is identified as a mandated lead arranger and bookrunner {{see source ID#195069}}, but sources disagree whether it was one of the lead (original) lenders or joined later in the loan's life prior to financial close {{see ID#195068}}. For the time being, AidData has coded the date of financial close as the commitment date and based the borrowing terms on the financial close date (i.e. a maturity period of six years and two months, as opposed to a seven-year maturity held by the original lenders in May 2017). 2. Neptune Energy's 2018 annual report states that amortization (repayment) would begin in April 2020; its 2019 annual report states that first repayment was pushed back from 2021 to 2022. AidData has for the time being assumed repayment was always scheduled to begin in 2021. This issue merits further investigation. 3. ENGIE E&P International S.A. was a European oil and gas company focused on exploration and production of hydrocarbons, particularly in the North Sea, North Africa, and Southeast Asia. Prior to its acquisition by Neptune Energy, it was a subsidiary of ENGIE, a global energy and services group. 4. In many loan structures (especially commodity-backed or reserve-based lending), the available credit amount isn’t fixed for the full term. Instead, the lender periodically “redetermines” the borrowing base based on updated financials, collateral values, commodity prices, or reserve estimates. Therefore, in early 2020, they reassessed the situation and decided that the borrowing base was $2.3 billion. Then they increased it to $2.6 billion USD. Therefore, this action gave the borrower more funds at hands. 5. The individual contribution of the 21 lenders to this $600 million USD upsizing are unknown. For the time being, AidData has estimated the contribution of BOC by assuming that each lender contributed an equal amount ($ 28571428.571 USD) to the loan syndicate.