Centrica has completed merger of its exploration and production businesses with Bayerngas Norge to form a joint venture named as Spirit Energy which has commenced trading as an independent oil and gas operator.

The British utility Centrica will own a stake of 69% in the new European exploration and production (E&P) company while the former shareholders of the Norwegian oil and gas company Bayerngas Norge will own the remaining 31% stake.

It was in mid-July that Centrica had entered into a deal with Bayerngas Norge’s majority owner, the Germany-based Stadtwerke München Group (SWM) to form the oil and gas joint venture.

Stadtwerke München Group CEO Florian Bieberbach said: “Combining our E&P business units will enable us to run our joint business more effectively and cost efficiently in the future.

“Future investments and risks will be spread broader in the more diversified and balanced portfolio. SWM Group is looking forward to the future cooperation with Centrica in the joint company Spirit Energy.”

The production from the combined portfolios for 2017 is anticipated to be nearly 50 million barrels of oil equivalent (mmboe) from 27 producing fields while total 2016 year end 2P reserves and 2C resources were 625mmboe.

Spirit Energy will have a workforce of over 700 employees working in the UK, Norway, Denmark and the Netherlands.

Centrica CEO Iain Conn said: “With the creation of Spirit Energy we have now completed the first phase of our portfolio transformation as we reallocate resources towards our customer-facing businesses, leaving Centrica well-positioned to deliver longer-term returns and growth.

“As one of the largest independent E&P companies in North-West Europe, Spirit Energy will have the possibility to participate in further consolidation and joint ventures, and creates further optionality for Centrica’s shareholders.”

The new JV has been formed with Centrica’s assets in the UK, Netherlands and Norway, and Bayerngas Norge’s assets in the Norway, UK, and Denmark.

Spirit Energy plans to invest £400-£600m per annum to achieve a medium-term production of 45-55mmboe from the assets put together.

Image: Centrica and Bayerngas Norge have launched a new E&P company named Spirit Energy. Photo: courtesy of Centrica plc.