Monthly deal round-up, April 2023- Renewable Energy & Oil and Gas, by Wesley Johnson
Hello, loyal followers and newcomers, welcome to our monthly deal flow blog which offers a wrap-up of the energy industry’s most significant funding deals across the oil, gas and renewable energy space.
Wow! What an exciting past month with a plethora of significant energy deals crossing over the finishing line.
In the world of renewables and in APAC, ADB secured financing to develop the first cross-border wind power project in Asia and the largest onshore wind farm in South East Asia. Brookfield Renewable Partners soon followed by acquiring Origin Energy for $12.4 billion to create one of the world’s largest renewable energy companies.
In Europe, Octopus Energy has earmarked plans to invest €1 billion in the French green energy market over the next 2 years in a move that seems to be a major vote of confidence in the French green energy sector. The investment will be deployed into accelerating the development of new solar and wind farms, and investing in energy storage and smart grid technologies.
And in Africa, Actis and Mainstream Power have completed the sale of Lekela Power in Africa’s biggest renewable energy deal to date. The transaction which has an enterprise value of approximately $1.5 billion is a positive development for the continent and a sign that Africa is becoming a more attractive destination for renewable energy investment.
The above suggests that the global trend towards renewable energy continues its merry way and investment appetite is on the rise thanks to a few factors including the likes of falling costs, government support, public demand and technological advances. However, I appreciate, there are still some yards for us to make up before we get there universally.
In the oil & gas space, we witnessed some meaty deals being finalised including the likes of Baytex Energy Corp’s acquisition of Ranger Oil for $2.5 billion and TotalEnergies acquisition of Cepsa’s upstream assets for $ 4.6 billion.
Equinor also decided to divest some of its working interests in the North Sea which suggests that the larger O&G companies continue to shed some of their non-core assets as part of their strategy to free up some cash flow.
More on the above-mentioned deals including many others in my monthly wrap-up below.
- ADB signs $692 million loan for largest wind power project in Southeast Asia
The Asian Development Bank and Monsoon Wind Power Company Limited signed a $692 million nonrecourse project financing package to build a 600-megawatt wind power plant in Lao PDR to export and sell power to Vietnam. This project will be the largest wind power farm in South East Asia. It’s expected to reduce greenhouse emissions by 2.4 million tons per year and generate enough electricity to power 600 000 homes, whilst they look to diversify their hydro generation.
- Brookfield Renewable to acquire Origin Energy
Brookfield Renewable Partners, a global leader in renewable energy, has agreed to acquire Origin Energy, one of Australia’s largest energy companies, for $12.4 billion. The deal, which is still subject to regulatory approval, will create one of the world’s largest renewable energy companies. The deal will give the company a significant presence in the Australian market, and it will also add a diversified portfolio of assets to its portfolio.
- Actis and Mainstream have completed a record transaction to sell Lekela Power to Infinity Power
The deal, which values Lekela at $1.5 billion sees Lekela sold to Infinity Power, a joint venture between Egypt’s Infinity and UAE’s Masdar. The sale of Lekela is a positive development for Africa. It will help to accelerate the development of renewable energy projects in Africa, which will help the continent to meet its climate targets. The investment will also create jobs and boost the economy.
- OYA Renewables secures financing for 100MW of New York Community Solar
OYA Renewables has secured a total of $216 million in financial backing for the construction of a slate of 15 community solar development projects throughout New York State. The projects are part of OYA’s 2023 pipeline for New York community solar works state wide. Community solar is a program that allows individuals and businesses to subscribe to a portion of a solar project, even if they do not own or lease the land on which the project is located. Subscribers receive a credit on their electric bill for their share of the solar power generated by the project
- Enel to sell Romanian assets to Greece’s PPC for $1.3 billion
The sale of Enel’s Romanian assets is part of the company’s plans to reduce its debt and focus on its core businesses. In November 2022, Enel announced that it would sell around €21 billion of assets over the 2023-2025 period. The sale is expected to close in Q3 of 2023 and is still subject to regulatory approval.
- Origis Energy has closed a deal to get a $750 million credit facility
Origis Energy, one of America’s leading renewable energy platforms, has announced the close of an upsizing amendment to their development finance facility doubling capacity to $750 million. With enhanced flexibility and increased capacity, the credit facility will support further expansion of its solar and energy storage project pipeline. This financing round follows a $375 million facility announced in May 2022
- Neoen secures €750 million for capex plans
The financing is a mix of debt and equity and will be used to fund the development of new renewable energy projects in Europe and Australia. The financing will allow Neoen to continue to grow its renewable energy portfolio and meet its ambitious growth targets. Neoen is targeting to reach 10 GW of installed capacity by 2025 and 20 GW by 2030.
- Silfab Solar raises $125 million to build third US Cell factory
The company has secured $125 million in investment from ARC Financial Corp, Manulife Financial Corporation, and Ontario Power Generation Inc. Pension Plan. The funding will be used to build a new solar cell manufacturing facility in the US.
- Scale Microgrids raises $225 million to scale up its distributed energy solutions.
The debt financing was led by KeyBanc Capital Markets and included participation from other leading financial institutions. The financing will be used to support Scale Microgrids growth plans, including the development of new distributed energy projects and the expansion of its existing portfolio
Oil & Gas
- QatarEnergy acquires stakes from ExxonMobil in Canada
QatarEnergy and ExxonMobil Canada announced a deal to acquire stakes in two Canadian offshore exploration blocks. The deal gives QatarEnergy a 28% interest in licence EL 1167 and a 40% interest in licence EL 1162. ExxonMobil Canada will continue to hold the remaining interests in both blocks. The deal is part of QatarEnergy’s strategy to expand its global oil and gas portfolio. The company is looking to secure new sources of oil and gas to meet the growing demand for energy in Qatar and around the world.
- Energy Transfer to acquire Lotus Midstream in a $1.45 billion cashback and stock deal
The deal will give Energy Transfer access to Lotus Midstream’s extensive network of crude oil gathering and transportation pipelines in the Permian Basin. The acquisition of Lotus Midstream is part of Energy Transfer’s strategy to expand its presence in the Permian Basin
- Prax to acquire Hurricane Energy
Prax Exploration & Production (Prax) announced that it has agreed to acquire Hurricane Energy (Hurricane) in a deal valued at £249 million ($300.6 million). The acquisition of Hurricane is part of Prax’s strategy to expand its upstream business in the North Sea.
- OKEA to acquire stake from Equinor for $220 million
Equinor has sold a 28% stake in PL037 (Statfjord area) to OKEA. The total consideration is USD 220 million plus a contingent payment element based on oil and gas prices over a 3-year period. The sale is part of Equinor’s strategy to focus on its core assets and to reduce its debt. The company has said that it is looking to sell $15 billion worth of assets by 2025.
- Baytex Energy Corp has acquired Ranger Oil Corp in a cash & stock deal worth $2.5 billion
The acquisition of Ranger will give Baytex a significant presence in the Eagle Ford shale basin, one of the most prolific oil and gas-producing regions in the United States. Ranger has a large inventory of drilling locations in the Eagle Ford, and the acquisition will allow Baytex to accelerate its growth in the basin.
- TotalEnergies acquires CEPSA’s upstream assets in the UAE for $4.6 billion
Under the terms of the deal, TotalEnergies will acquire a 20% stake in the Satah Al Razboot (SARB) and Umm Lulu offshore oil fields, as well as a 12.88% indirect interest in the Mubarraz concession held by Abu Dhabi Oil Company Ltd (ADOC). The Mubarraz concession is comprised of four producing offshore fields.
- Equinor acquires Suncor Energy’s interests for $850 million
The deal included a non-operated interest in the producing Buzzard oil field, a 40% operated interest in the Rosebank development and the absorption of Suncor employees based in the UK who work with those assets. Equinor said the transaction was in line with its strategy of optimizing its oil & gas portfolio and deepening in its core countries
- Equinor has signed an agreement to acquire an interest in five discoveries from Wellesley Petroleum.
Equinor has signed an agreement to acquire an equity interest in five discoveries in the Troll, Fram and Kvitebjørn area in the North Sea on the Norwegian continental shelf (NCS) from Wellesley Petroleum AS. The Troll, Fram and Kvitebjørn area is a prolific oil and gas province, and the five discoveries are all located in close proximity to existing infrastructure. This makes them well-placed to be developed quickly and cost-effectively. The acquisition is part of Equinor’s strategy to grow its oil and gas production in Norway.
In conclusion, the past month has seen significant developments in both renewable energy and natural resources. There seems to be growing confidence from investors to deploy their mandates into renewable energy technologies and they are not shying away from emerging markets as we witnessed with Actis and the sale of Lekela Power in Africa.
Further to the above, a recent report by IRENA(Global Landscape of Renewable Energy Finance 2023), highlighted that global investment in energy transition technologies last year, including energy efficiency reached $1.3 trillion which set a record high up 19% from 2021 investment levels, and 70% from before the pandemic in 2019. This provides further evidence that suggests investment in clean technology is on an upward trajectory and investors are settling in for the long haul.
Major oil and gas companies continue to consolidate and shed non-core assets as part of their strategy to free up some cash flow, reduce debt and become more efficient as we witnessed with TotalEnergies acquisition of Cepsa’s upstream assets and Suncor offloading its assets to Equinor for $850 million, amongst a few other transactions.
Stay tuned for more updates on the latest monthly energy investment deals and commentary, and don’t forget to follow me for regular updates. 😊