Centrica Buys Newfield's North Sea Assets
Centrica plc, the owner of British Gas, has purchased the entire share capital of Newfield UK Holdings Limited, the UK subsidiary of Newfield Exploration Company, for $486.4 million (£242 million) in cash. The price is subject to certain adjustments based on working capital and indebtedness.
Centrica will take an 85 percent operated interest in the Grove gas field which started production in summer 2007, an 80 percent interest in the Seven Seas gas development, the Sloop gas discovery and associated exploration acreage.
Sam Laidlaw, Chief Executive of Centrica, said: "This important investment to acquire Newfield UK is in line with our strategy of increasing our level of gas reserves to supply our British Gas and European customers. As a result of the acquisition, we expect to add net gas reserves of up to 300 billion cubic feet of gas over the next three years, equivalent to more than a fifth of Centrica's current UK gas reserves.
"We will also benefit through equity gas being delivered into continental Europe, close to our main customer base in Holland and Belgium. The acquisition also brings organizational capability and helps build our competitive advantage through the experience of operating development-stage gas fields."
Grove has been developed with a normally unmanned platform exporting gas via pipeline to the Venture operated Markham field and then to Den Helder in the Netherlands. Centrica's partner in the field is Sojitz, a Japanese conglomerate, with 15 percent interest. Seven Seas is a development prospect which Centrica will operate with an 80 percent interest, with Sojitz holding 20 percent. First production is anticipated around 2010. Exploration acreage includes interests in six licenses within the Southern North Sea.
It is currently estimated that additional capital expenditure of around £150 million will be required to realize the full gas reserves potential.
The seller is Newfield International Holdings Inc. The purchaser is GB Gas Holdings Limited, a subsidiary of Centrica plc.
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