Repsol and NEO Energy have agreed to merge their upstream businesses in the UK North Sea, creating a joint venture called NEO NEXT Energy.
The combined group will be renamed NEO NEXT Energy Ltd. and is expected to become one of the largest independent producers in the North Sea, combining the asset portfolios of both companies and generating cashflows that are expected to exceed $1 billion.
“Repsol contributes operational capabilities on production, development, and decommissioning activities which will be combined with NEO Energy expertise on financial and commercial matters. We believe this combined business has many more opportunities for profitable growth in the basin and beyond,” Francisco Gea, CEO of Repsol E&P, said in a statement.
Under the terms of the transaction, NEO will own 55% of the combined business, with Repsol owning the remaining 45%. It will be led by a joint executive team and is expected to produce 130,000 BOED in 2025, said Repsol.
Repsol will retain $1.8 billion of the decommissioning liabilities related to its legacy assets, enhancing the cash flows of the combined business.
The deal remains subject to customary closing conditions but is expected to be completed in the third quarter of the year.
