Centrica has limited its exposure to the oil and gas industry by merging its exploration and production business with Oslo-based Bayerngas Norge.
The deal will see the British Gas owner take a 69 per cent stake in the enlarged venture. The remaining 31 per cent will be owned by Bayerngas Norge’s existing shareholders, led by Munich’s municipal utilities company Stadtwerke München and Bayerngas.
Managed independently and headquartered in London, Centrica said the new entity would provide the opportunity to strengthen through acquisition, with the potential for a stock market flotation in the medium term.
Centrica will make £340 million in deferred payments until 2020 to cover decommissioning costs.
The merging parties said the new business would hold a complementary mix of producing and development assets, creating a “robust, self-financing entity with an attractive financial profile, enabling organic and inorganic reinvestment and distributions”.
Bayerngas Norge was created in 2006 to safeguard supplies of gas to Bavaria in Germany.
The enlarged business will own assets in the UK, Denmark, Netherlands and Norway.
The business will be led by Chris Cox, currently managing director of Centrica E&P.
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