On Thursday, Jefferies maintained a positive outlook on Energean Oil & Gas (ENOG:LN) (OTC: EERGF) shares, reiterating a Buy rating and a price target of GBP13.50.
This affirmation comes despite the company's unexpected sale of its assets in Egypt and Italy, which was conducted at an implied 26% discount to the firm's asset net asset value (NAV). The transaction, involving nearly $1 billion of gas-weighted Mediterranean production assets, was made to private equity firm Carlyle, highlighting perceived value in the sector.
Energean has announced that it will be utilizing proceeds from the sale to address financial commitments and reward shareholders. Specifically, the company plans to repay a $450 million corporate bond and distribute a $200 million special dividend.
A conference call is scheduled for 10:30 am UK time to discuss the sale's details, including the rationale behind the strategic move and its impact on Energean's balance sheet, as well as future growth prospects.
The focus of the call is expected to be on the strategic reasoning for the sale and how it aligns with the demands of the company's balance sheet, alongside expectations for growth centered on its core production assets in Israel. Additionally, the company is looking forward to the potential upside from new ventures, such as the appraisal of the Anchois well in Morocco, planned for the third quarter of 2024.
The completion of this transaction is anticipated by the end of the year 2024. The sale marks a significant shift for Energean, as it will now concentrate more heavily on its Israel production assets and the upcoming appraisal in Morocco, which could present new opportunities for growth and expansion.
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