Centrica to acquire further offshore assets

Centrica plc has today announced that its subsidiary Centrica Resources Limited has reached agreements with ChevronTexaco to acquire further offshore oil and gas assets for a total consideration, including the value of associated tax allowances, of £60.7 million.

The acquisitions will add around 280 million therms of gas and nine million barrels of oil to Centrica’s portfolio, with a further development option to significantly boost reserves. Additional investment to complete this development by 2007 would provide around a further 600 million therms of gas and nine million barrels of oil. Centrica’s share of the development program is estimated at approximately £60 million.

Under the agreements, Centrica is to acquire a 33.33 per cent interest in the UK side of the Statfjord oil and gas field (the Statfjord field is located in both UK and Norwegian waters) and a 50 per cent interest in the Orwell gas field (located in the Southern North Sea).

The agreements are conditional upon the pre-emption rights of the field co-owners and DTI approval, with completion expected in March/April 2004.

Gas from the Orwell field is uncontracted and would add approximately 160 million therms of gas to Centrica’s portfolio, being delivered to Bacton via the Thames field (Centrica owns 10 per cent of Thames and has a 23.15 per cent interest in the Hewett Bacton terminal).

Gas from the Statfjord field is uncontracted, being delivered to the St Fergus terminal and would add 120 million therms of gas and nine million barrels of oil to Centrica’s portfolio.

In addition and subject to partner approval, the planned capital expenditure program between 2005-2007 is designed to maximise gas production from the Statfjord field over the following 10 years, increasing the level of recoverable gas reserves by more than five times as well as enhancing the ultimate level of recoverable oil reserves.

Jake Ulrich, Managing Director of Centrica Energy Management Group said: "This agreement is in keeping with our upstream assets strategy, building on our portfolio of gas producing assets and medium term field development opportunities. The associated oil production will provide us with both a valuable hedge and a revenue stream."