Centrica and Stadtwerke München have agreed to combine Centrica’s European oil and gas exploration and production business with Bayerngas Norge.
The new joint venture company will be owned 69% by Centrica and 31% by Bayerngas Norge’s existing shareholders, led by SWM and Bayerngas, and could ultimately be listed on the stock market.
The JV will comprise Centrica’s assets in the UK, Netherlands and Norway and Bayerngas Norge’s assets in the UK, Norway and Denmark.
Once combined, the JV would have 2016 year-end 2P reserves of 409 MMboe, 2016 year-end 2C resources of 216 MMboe (66% gas reserves) and expected combined 2017 production in the range 50-55 MMboe from 27 producing fields. The company's assets will include a UK onshore terminal at Barrow-in-Furness.
The deal, which is expected to realize cost savings of £100-150 million, is due to close in Q4.
Near and medium-term production will come from established assets including Morecambe, Greater Markham, Kvitebjørn and Statfjord, and from recently on-stream assets Valemon, Cygnus and Ivar Aasen. The joint venture will also own a collection of development assets, including Maria, Oda, Fogelberg and Skarfjell in Norway and Hejre and Solsort in Denmark.
Centrica Group CEO Iain Conn said: “As one of the largest independent E&P companies in North-West Europe, the new entity will have the possibility to participate in further consolidation and joint ventures, and creates future optionality for Centrica’s shareholders.”
Centrica expects to acquire and market all production from the Joint Venture’s assets under marketing and sales agreements.