Centrica to sell Spirit Energy’s Norway assets in $1bn deal as it looks to decarbonise portfolio
Spirit Energy is selling its Norwegian oil and gas production business and its Statfjord field in a deal worth over $1bn in cash.
The decision was announced by Centrica – which has a 69 per cent shareholding in the firm.
Sval Energi will acquire the Norwegian oil and gas business, and Equinor will buy the Statfjord field.
Alongside the cash influx, the deals include a contingent payment linked to commodity prices.
Decommissioning liabilities – currently estimated at $1.1bn – will also be transferred to the buyers.
Centrica’s share of the proceeds of around $740m will also be retained on the balance sheet.
The sales reduce Spirit Energy’s oil and liquids reserves by 92 per cent and its gas reserves by 38 percent – with Centrica looking to decarbonise its portfolio and reduce fossil fuel exposure.
The developments also reduce financial risks in Centrica’s business model such as earnings and cashflow volatility.
Centrica will retain its shareholding in Spirit Energy, which will now only own oil and gas assets in the U.K. and the Netherlands only – simplifying its business model.
It is looking to focus more on its core home markets of the U.K. and Ireland.
The company considers the sale to be an important milestone in its turnaround, with the deal following its sale of Direct Energy and its organisational restructure last year.
The company’s future strategy will focus on maximising value from its remaining portfolio of assets while minimising investment in oil and gas exploration and development.
Centrica will also pursue potential investments in energy transition opportunities that leverage Spirit Energy assets and infrastructure, such as carbon capture and hydrogen projects that could catalyse the transition to net zero.
Chris O’Shea, group chief executive of Centrica, argues the arrangements will hugely benefit shareholders.
He said: “We are pleased to continue to bring focus to Centrica’s portfolio with these transactions, which are aligned with our strategy to reduce our exposure to carbon intensive oil and gas exploration and production in a way that maximises shareholder value.”