Centrica to increase its stake in North Sea Statfjord field to 34%

Centrica plc, the parent company of British Gas, has reached an agreement with ConocoPhillips to acquire its non-operated interests in the gas and oil producing Statfjord field and associated satellites for a total cash consideration of $223 million (£142 million), including $103 million (£66 million) attributable to historic tax allowances.

The fields, which are located across both the Norwegian and UK sectors of the Northern North Sea, produce gas for the UK market. The acquisition further strengthens Centrica’s integrated business model and provides another secure source of gas for our UK customers.

The deal will see Centrica acquire a further 15.17% interest in the field which, combined with its existing equity interest, will increase its overall stake in this core asset to 34.30%. It will also see the company increase its interest in the Statfjord satellites (Statfjord Nord, Statfjord Øst and Sygna), all of which are producing fields tied back to Statfjord. The gas produced from these fields is either uncontracted or already contracted to Centrica and is directly linked to the UK market.

The acquisition adds material long-term production to Centrica’s portfolio, providing additional reserves of 36 million barrels of oil equivalent (mmboe), an increase of about 9% split approximately 60% liquids and 40% gas. The resulting net increase in production will be over 11,000 boe per day, with production weighted towards liquids in the early years. Field development costs of approximately £200 million relating to the acquired interests will be required to maximise the long-term recoverable reserves from these fields and the acquisition is expected to generate strong immediate earnings and cashflow.

Dag Omre, Regional Director in Norway, says:
“This announcement represents another significant milestone for our business here in Norway. In November last year we announced a 10-year supply deal with the UK and a £1bn acquisition of gas producing and developing assets from Statoil more than doubling our production and taking on our first operatorship of a producing asset. We are looking forward to exciting times ahead as we continue to grow the business both through acquisitions and our exploration activities.“

Enquiries:
Centrica Investor Relations
+44 (0)1753 494900

Centrica Media Relations
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Notes:

1. Based on reported Centrica Energy 2P 2010 year end reserves, which excludes gas in the Rough storage facility, North American reserves, and reserves from the acquisition of assets from Statoil announced in November 2011.
2. The effective date for the transaction is 1 January 2012. The transaction is expected to close in May 2012.
3. Centrica is purchasing the UK piece of Statfjord from ConocoPhillips (UK) Limited and the Norway piece from ConocoPhillips Skandinavia AS.
4. The Statfjord field is operated by Statoil (44.337%), with licence partners Centrica (34.296% following completion of this acquisition) and ExxonMobil (21.367%).
5. As part of the acquisition Centrica is acquiring a 12.08% interest in Statfjord Nord, a 6.04% interest in Statfjord Øst and a 6.65% interest in Sygna. This takes Centrica’s total interest to 23.12% in Statfjord Nord, to 11.56% in Statfjord Øst and to 12.71% in Sygna.
6. In September 2010 Centrica announced the acquisition of Shell’s non-operated interests in the Statfjord field in the Norwegian sector of the North Sea, and its associated satellite fields, for a total cash consideration of NOK1,370 million (£144 million), including NOK670 million (£70 million) attributable to historic tax allowances.
7. In November 2011 Centrica signed a £13 billion gas supply deal for the UK with Norway from 2015 and announced the £1bn acquisition of producing and development assets from Statoil in the Norwegian North Sea which is expected to close in the first half of 2012. When combined with the Statfjord acquisition announced today, this will represent an increase of nearly 40% in reserves and over 30% in production.