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.

"Marathon's decision to sell its interest in Heimdal and related assets is part of our ongoing efforts to actively manage the Company's global asset portfolio to ensure alignment with our business strategy and to generate sustainable value growth," said David E Roberts, Jr., Marathon executive vice president for upstream businesses.

"This business approach demands that we continually evaluate the value of existing operations against the value of new or emerging opportunities," he added.

Centrica will invest £125 million to maximize total reserves potential of about 165 billion cubic feet equivalent of oil and gas reserves over the next four years. The fields had recognisable reserves of 100 billion cubic feet equivalent as of Jan 1, of which 70 per cent is gas.

Gas currently being produced from the fields is contracted until 2011 at prices directly linked to the UK market. After 2011, Centrica could deliver the gas to the UK or continental Europe.

The acquisition will boost Centrica's equity gas reserves by 2 per cent of it annual gas supply needs, company spokesman Andrew Hanson said.

The acquisition "will maintain our hedge position above 20 per cent. As other production declines," we need to take steps to make sure we replenish our reserves, he added.

Over the past two years Centrica has acquired interests in twelve exploration licenses in the Norwegian sector and holds interests in over thirty producing, development or exploration stage assets in the UK sector.

Centrica plc is a large multinational utility company, based in the UK but also with interests in North America and Europe. It was created in 1997 when British Gas plc de-merged into Centrica plc and BG plc (later BG Group plc).

The de-merger grouped British Gas's gas supply, services, retail businesses and gas production business of the Morecambe gas fields under Centrica.

Centrica is the largest supplier of gas to domestic customers in the UK, and one of the largest suppliers of electricity, operating under the trading names "Scottish Gas" in Scotland and "British Gas" in the rest of the UK. It had revenues of £16.34 billion last year.

Marathon Oil Corporation, based in Houston, Texas, is a worldwide oil and natural gas exploration and production company. Principal exploration activities are in the US, Norway, Equatorial Guinea, Angola and Canada. Principal development activities are in the US, the UK, Ireland, Norway, Equatorial Guinea, and Gabon.

In addition, Marathon operates other businesses that market and transport its own and third-party natural gas, crude oil and products manufactured from natural gas, such as liquefied natural gas and methanol, primarily in the US, Europe and West Africa. It reported annual revenues of $62.8 billion in 2007.