Centrica plc today announced it has reached an agreement with Wham Energy Limited (“Wham”) and Endeavour Energy Limited (“Endeavour”) which will result in a 40 per cent equity ownership of licence P1132 in the Southern North Sea, including participating in an exploration well to be drilled in the third quarter of 2005. This licence covers blocks 42/12 and 42/22 which Centrica is farming into.
Under the agreement, Wham has agreed to farm out half of its 40 per cent equity in these licence blocks to Centrica, in consideration of Centrica drilling an exploration well in the third quarter. Similarly, Centrica will acquire 20 per cent equity from Endeavour. Subject to all agreed drilling conditions being met, Centrica would hold 40 per cent equity in the licence. The expected cost to Centrica would be approximately £5.5 million.
The agreement is Centrica’s first investment in an exploration prospect outside of its own existing equity infrastructure. Within its future gas sourcing strategy it intends to consider a limited number of targeted future exploration opportunities, largely through partnership activities close to current producing fields, alongside equity investments, contractual agreements and traded market purchases.
Sir Roy Gardner, Chief Executive of Centrica, said: “This agreement is one of a limited number of exploration wells that Centrica expects to consider in the future, as we focus on a range of opportunities to add reserves to our portfolio.
“The current high wholesale price of gas makes increased exploration activity an attractive option. Our intention is to work alongside partners and consider prospects close to producing assets within the UK, Norwegian or Dutch sectors.”