The UK Centrica said on July 17, 2017, that it had signed an agreement to combine its oil and gas business with german Bayerngas Norge.
The Joint Venture will comprise Centrica’s assets in the UK, Netherlands and Norway and Bayerngas Norge’s assets in the UK, Norway and Denmark.
Centrica said the deal would create a joint venture which is among the top 5 independent operators in Europe in terms of production and reserves.
The joint venture will have 2 shareholding entities. Centrica will own 69% and Bayerngas Norge’s existing shareholders, led by SWM and Bayerngas, will own 31%.
Centrica will contribute its European E&P business and make a series of deferred payments totalling £340 million through 2022 in exchange for its 69% stake.
Bayerngas Norge will contribute 100% of its shares in exchange for its 31%.
The transaction is expected to go through in the 4th quarter of 2017. Centrica will consolidate the joint venture in its accounts.
Centrica chief executive Iain Conn 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.».
Bayerngas Norge, founded in 2006, is the upstream E&P vehicle of SWM, which is Munich’s municipal utilities company, and 2 minority partners.
SWM chief executive Florian Bieberbach said: «We are convinced that by combining our E&P activities we will create an even stronger and more sustainable business. With its similar background and strategy, Centrica is an ideal partner to develop and grow this joint venture together.».