Centrica’s European oil and gas exploration and production and Bayerngas Norge AS will form a joint venture (JV) to create an independent European E&P company. The deal is expected to close in the fourth quarter with Centrica to own 69% and Bayerngas Norge 31%.
The JV comprises Centrica’s assets in the UK, the Netherlands, and Norway, and Bayerngas Norge’s assets in the UK, Norway, and Denmark.
Centrica recently sold its Canada and Trinidad & Tobago (T&T) gas assets. The Canada assets were sold in June to MIE Holdings Corp., the Can-China Global Resource Fund, and Swiss commodity trading firm Mercuria; the T&T assets were sold to Royal Dutch Shell last year.
Iain Conn, group chief executive of Centrica plc, said: “As part of our strategy of 2015, we have been aiming to develop a more focused and stronger E&P business which will contribute to the resilience of the group while limiting Centrica’s E&P participation. Alongside the recently-announced disposals of our Canada and Trinidad & Tobago assets, this joint venture creates a larger, more sustainable, and more capable European E&P business. As one of the largest independent E&P companies in northwest Europe, the new entity will have the possibility to participate in further consolidation and joint ventures.”
Expected combined 2017 production is from 50 to 55 million BOE from 27 producing fields, of which the JV will be the operator of approximately 22%. The 2016 year-end 2P reserves were 409 million BOE and 2016 year-end 2C resources were 216 million BOE.
Near- and medium-term production will come from established assets including Morecambe, Greater Markham, Kvitebjørn, and Statfjord. Assets recently brought on-stream include Valemon, Cygnus, and Ivar Aasen.
The Ivar Aasen oil and Cygnus gas came on-stream last December, and the Valemon gas and condensate field was brought on line in January 2015. Development assets include Maria, Oda, Fogelberg, and Skarfjell in Norway, and Hejre and Solsort in Denmark.
