UK energy utility Centrica buys stakes in Norwegian gas and oil fields for $416 million

09 July 2008

UK energy utility Centrica PLC today said it had purchased stakes in four Norwegian North Sea offshore gas and oil fields and two undeveloped discoveries for $416 million in a bid to replenish its natural gas reserves. Centrica is acquiring its first gas producing assets in the Norwegian North Sea from Houston-based crude giant Marathon Oil Corp.

Upon completion, Centrica will own a 23.8-per cent stake in the Heimdal field, 46.9 per cent stake in the Vale field, 20 per cent stake in the Byggve field, and 20 per cent in the Skirne field.

Marathon's net proved reserves associated with these assets as of year-end 2007 were 4.8 million barrels of oil equivalent (mmboe), and total net risked resources of approximately 17.5 mmboe. Current net production from these operations averages approximately 7,000 barrels of oil equivalent per day.

The deal doesn't include Marathon's Alvheim field assets, which recently came on-stream, but it does include a 20 per cent interest in the Heimdal East and 50 per cent interest in the Peik discoveries respectively that could be developed by 2012.

The transaction, which has a total value of $416 million and an effective date of 1 January 2008, includes a $375 million purchase price plus $41 million in associated Norwegian asset tax pools, but excludes any purchase price adjustments due at closing. The companies anticipate closing the transaction, which is subject to Norwegian regulatory approval, during the late third quarter or early fourth quarter of 2008.

"This investment is in line with our strategy to reduce the group's exposure to movements in gas prices through securing additional upstream assets. It also increases the level of gas reserves to supply our British Gas customers and gives us our first producing interests in Norway, building on our existing exploration position," Sam Laidlaw, CEO of Centrica, said in a statement.