Centrica to buy UK North Sea upstream assets

Centrica will gain interests in gas assets—Grove, Sloop, and associated six exploration licenses in the UK North Sea—to bolster supplies to its British and European customers via its subsidiary British Gas.

Uchenna Izundu
International Editor

LONDON, Oct. 5 -- Centrica PLC will gain interests in gas assets—Grove, Sloop, and associated six exploration licenses in the UK North Sea—to bolster supplies to its British and European customers via its subsidiary British Gas.

Centrica agreed last month to acquire Newfield Exploration Co.'s UK subsidiary Newfield UK Holdings Ltd., including an 85% operated interest in Grove field, which came on stream in April; an 80% interest in the undeveloped Seven Seas discovery; and an interest in 200,000 net acres in the Southern Gas basin (OGJ Online, Sept. 19, 2007). The sale is expected to close in the fourth quarter, with Newfield effectively exiting the North Sea.

Centrica will pay $486.4 million in cash and the price is subject to certain adjustments based on working capital and indebtedness.

Grove was developed with an unmanned platform and delivers gas to Dan Helder in the Netherlands via pipeline. Centrica will work with Sojitz Corp., a Japanese conglomerate, with a 15% stake.

Centrica also will operate Seven Seas, a development prospect, in partnership with Sojitz which will have a 20% interest. First gas is anticipated around 2010.

"It is currently estimated that additional capital expenditure of around £150 million will be required to realize the full gas reserves potential," Centrica said.

Its new exploration acreage with interests in six licenses will be in the southern North Sea

Sam Laidlaw, chief executive of Centrica, said the acquisition should add 300 bcf net gas reserves over the next 3 years, equivalent to more than a fifth of Centrica's current UK gas reserves.

The company also will have equity gas delivered into continental Europe, close to its main customer base in the Netherlands and Belgium.

Contact Uchenna Izundu at uchennai@pennwell.com.

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