Facing Crowded IPO pipeline, Neptune Energy To Tighten ESG Belt

November 25, 2019 | ESG and Sustainability, News
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Private-equity backed Neptune Energy has committed to revealing its ESG strategy in its 2019 Annual Report & Accounts.

A BloombergLaw report said Neptune Energy would explain to investors how its business will weather mounting environmental, social, and governance (ESG) concerns. According to this report, Neptune will publish for the first time, its ESG plan in its Annual Report around April 2020. Readying for an IPO means readying a low-carbon strategy, the article said.

In September, Neptune’s CFO Armand Lumens said the company would be ready for its IPO by April 2020. “Then we will seize on an opportunity that could potentially come along in the 18-24 months that come thereafter,” he added.

However, the company said Friday there was only a slim chance that it would come out with an IPO next year. Currently, the company’s priorities are exploration and bringing projects to production.

Neptune’s IPO

Private equity giants Carlyle Group and CVC Capital Partners back Neptune Energy. In 2017, it acquired oil and gas assets from French Engie for $3.9 billion, including in the North Sea. Again, in 2018, it bought North Sea assets from Germany’s VNG for $412.5 million. Moreover, last month, it struck a $250m deal for the acquisition of UK and Norwegian North Sea assets of Italian utility Edison.

Earlier this month, Norwegian oil company Equinor reported a major discovery in a North sea oil well estimated to recoverable resources of between 38 million and 100 million barrels of oil equivalent. Neptune Energy has a 15% share in the well. It is located in the most mature area of the Norwegian continental shelf (NCS).

However, the Norwegian government is under fire from environmental organizations such as Greenpeace, Friends of the Earth, and others for the award of oil exploration licenses. They have taken their grievances to the country’s top appeals court. They allege that the licenses violate human rights to a safe and healthy environment. Moreover, they also violate the 2015 Paris climate accord.

Oil and gas companies also face an investor backlash stemming from ESG concerns.

Meanwhile, there is a stack of oil-and-gas IPOs in the pipeline. These include Chrysaor, Siccar Point, Spirit Energy, German-Russian Wintershall Dea, and Israeli-owned Ithaca Energy.

However, non-ESG problems include stagnant oil prices and the mega Saudi Aramco IPO. The latter could drain funds that might otherwise have flown to these IPO-hopefuls.

Neptune Energy and ESG

Meanwhile, IPO or not, Neptune Energy appreciates the ESG writing on the wall. It said in its Q3 2019 report on ESG:

  • Committed to a production profile that is weighted more towards gas than oil
  • The mix will ease the transition to a lower-carbon energy mix and provide stronger demand growth fundamentals
  • Have one of the lowest CO2 emissions intensities in the sector
  • Implementing a new environmental policy
  • Will provide strategy and more information in 2019 Annual Report

John Browne, the former BP Plc chief, who helped create Wintershall DEA, the largest privately-held oil company in Europe, has said an ESG strategy is now crucial to attracting investment.

“Sentiment in the market is not necessarily as strong as it used to be for oil and gas assets… we’re moving towards a lower-carbon economy,” said Les Thomas, chief executive of Ithaca, owned by Israel’s Delek Group.

“To continue investing as an energy company only in oil, from an ESG perspective, is suicidal,” he added.

[Related Story: Temasek Will Sit Out the Saudi Aramco IPO on Environmental Concerns ]

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