Centrica plc owns 69% of Spirit Energy, with Bayerngas Norge’s former shareholders, led by Stadtwerke München Group (SWM), owning 31%.
2017 production from the combined portfolios is expected to be around 50 million barrels of oil equivalent (mmboe) from 27 producing fields, and total 2016 year end 2P reserves and 2C resources were 625 mmboe. The company employs more than 700 people in the UK, Norway, Netherlands and Denmark.
The formation of Spirit Energy creates a strong and sustainable European E&P business, combining Centrica’s cash-generative and relatively near-term production profile with Bayerngas Norge’s more recently on-stream producing assets and development portfolio. The new company will be a robust, self-financing entity, and will invest in the range £400-£600 million per annum to deliver sustainable medium-term production of 45-55 mmboe. The transaction is expected to generate £100-£150 million net present value of synergies and the joint venture will have the opportunity to strengthen through further consolidation and joint ventures.
For Centrica, the creation of Spirit Energy completes the first phase of its planned portfolio transformation, as it continues to pursue delivery of longer-term returns and growth with a greater focus on its customer-facing businesses within clear strategic frameworks for both Consumer and Business divisions. The establishment of Spirit Energy also gives its shareholders greater strategic optionality including the potential to participate in further industry consolidation.
Spirit Energy’s focus in 2018 will be to maximise efficiency from its producing assets, as well as progressing several key projects including the developments of Maria and Oda, appraisal drilling at the Fogelberg discovery and drilling on a number of exploration prospects. Spirit Energy will also partner with Wintershall in submitting a plan for development and operation for the Skarfjell development.
Chris Cox, Chief Executive of Spirit Energy, said:
“Teams across both Centrica’s E&P business and Bayerngas Norge have been working hard over the last few months to combine the businesses and today that hard work is reflected in the launch of Spirit Energy.
“Now that both businesses have been brought together, these teams and complementary portfolios set us up to be a strong and sustainable E&P business, built for the long-term and committed to Europe.”
Chris Cox will be joined on the Spirit Energy management team by Andrew le Poidevin as Chief Financial Officer and Gerry Harrison as Chief of Staff. Spirit Energy’s board will be made up of Chris Cox, plus four appointees from Centrica and two from Stadtwerke München. It will be chaired by Centrica’s Group Executive Director Mark Hanafin.