Tenaz Energy Corp. has reached an agreement with Nederlandse Aardolie Maatschappij B.V., a 50/50 joint venture between Shell PLC and ExxonMobil Corporation, to acquire all outstanding shares of NAM Offshore B.V. for a base price of €165 million ($246 million), excluding closing adjustments and contingent payments. The transaction, effective January 1, 2024, is anticipated to be finalized by mid-2025, subject to statutory merger approvals and the completion of operational transition activities.

NOBV is projected to produce nearly 11,000 barrels of oil equivalent per day (99% TTF natural gas) and generate around €90 million ($134 million) in free cash flow based on current strip prices for 2024. This cash flow is supported by a mix of fixed-price and collar hedges for the years 2024 through 2026.

The Acquisition will be funded through a combination of interim free cash flow from the Effective Date until closing, a €23 million ($34 million) deposit made to NAM, existing cash reserves, and available funds from a new credit and delayed draw term loan facility with the National Bank of Canada (“NBC”). The company currently estimates that approximately €30 million ($45 million) in cash will be required to close, assuming a mid-year completion date.

Transaction Highlights

• Advances M&A Strategy: This acquisition aligns with our M&A strategy by securing a high-margin, low-decline asset base with substantial infrastructure, low-risk development opportunities, and future exploration potential. The financing structure of the acquisition prevents dilution and maximizes value for current shareholders.

• Transformational Impact: Pro forma, the transaction adds approximately 11,000 boe/d (99% gas) in production and 53.6 million boe of Total Proved + Probable (“2P”) reserves. It results in a 3.9x increase in corporate production, a 3.7x rise in 2P reserves, and a 6.2x boost in 2P reserve value.

• Significant North Sea Presence: After the acquisition, Tenaz will become the second-largest operator in the Dutch North Sea (DNS). NOBV’s production constitutes around 20% of DNS gas output and is 87% operated by NOBV.

• Strong Free Funds Flow: The acquired assets are projected to generate over €90 million in free cash flow for 2024. Cash flows are well-protected by fixed-price hedging contracts covering 46% of production from 2024 to 2026, with an average fixed price of €38.79/MWh ($16.94/MMbtu). This robust cash flow profile offers significant flexibility for future capital allocation, including capital returns, low-risk development, and high-impact exploration.

• Effective Transaction Structure and Financing: The combination of strong interim cash flow and a contingent payment structure reduces cash consideration at closing and mitigates risk for Tenaz. The transaction structure aligns contingent payments with additional value realization for Tenaz shareholders. The acquisition is expected to be financed through existing liquidity and new non-dilutive capital, aiming to maximize value for current shareholders. The deal is anticipated to yield significant accretion across key metrics, including production, reserves, cash flow, free cash flow, and net asset value per share.

Anthony Marino, President & CEO of Tenaz, commented, "This acquisition represents a significant advancement in our strategy to secure value-enhancing assets with substantial organic growth potential. We are excited to welcome NOBV’s talented and experienced team, whose expertise will be crucial to Tenaz's ongoing success. We are enthusiastic about investing in the revitalization and sustainability of the Netherlands' energy sector and look forward to setting up our Dutch headquarters near the current NOBV office in the Netherlands."