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Centrica to form E&P business JV

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LONDON: Centrica Plc said on Monday it agreed to combine its entire European exploration and production (E&P) business with Bayerngas Norge AS, as the British energy provider seeks to create a more sustainable European E&P business.


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 will own a 69 per cent stake in the new venture, while Bayerngas Norge’s existing shareholders, led by German utility Stadtwerke Munchen GmbH (SWM) and Bayerngas GmbH, will own the rest, Centrica said.


Centrica, Britain’s biggest home energy supplier, said there was also potential to initiate an initial public offering of the joint venture after two years.


The move comes after Centrica’s 2015 decision to sell up to 1 billion pounds worth of upstream and wind assets by 2017 as it looked to focus on energy supply and services. The company agreed last month to sell its stake in Canadian oil and gas exploration and production joint venture, after selling its gas assets in Trinidad and Tobago last year.


The company said it would make a series of payments of about 340 million pounds ($444.6 million) including tax to the joint venture over the next five years.


The JV is expected to invest about 80 per cent of its operating cash flow, post tax, to maintain its production of 45-55 million barrels of oil equivalents per annum while in the near term, it is expected to invest between 400 million pounds and 600 million pounds a year, Centrica said.


Centrica expects to buy and market all production from the JV’s assets.


Chris Cox, currently managing director of Centrica E&P, will be the chief executive of the joint venture. Reuters


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