Centrica, the parent company of British Gas, has reached an agreement with Hess to acquire a 67% interest in the undeveloped York gas fields in the southern North Sea for GBP22 million in cash.
According to Centrica, the acquisition adds to the 23% of the development acquired as part of the Rough gas storage acquisition in 2003, and takes Centrica’s interest in the fields to 90%.
After further capital investment of around GBP220 million, Centrica expects to recognize 107 billion cubic feet (bcf) of reserves from its enlarged stake in the field, of which 79bcf are directly attributable to this acquisition.
Once developed, unit costs of production on these fields are expected to be lower than the average across Centrica’s other joint venture fields due to its proximity to Rough. The profits from production will be subject to the normal UK tax rate for gas production, currently 50%, said the company.
Sam Laidlaw, CEO of Centrica, said: “The aim is to reduce the group’s exposure to movements in gas prices through securing additional upstream assets. It also increases the level of gas reserves to supply our customers and builds on our existing portfolio of producing and exploration prospects.”