Centrica Restarts Talks to Sell North Sea Energy Venture

Centrica Plc, the biggest supplier of energy to U.K. homes, has resumed talks over a potential sale of its North Sea oil and gas venture after putting the plans on hold earlier this year.

The London-listed company is in discussions with “a number of parties” regarding a sale of its controlling stake in Spirit Energy Ltd. “but hasn’t restarted the official sale process,” a representative for Centrica said in response to Bloomberg queries.

The stake in Spirit Energy could be worth $1.8 billion to $1.9 billion, said Elchin Mammadov, a senior utilities analyst with Bloomberg Intelligence.

Centrica has been seeking to shed its exploration and production operations to focus on energy supply. It initially kicked off the Spirit Energy sale last year, when the business’s valuation was pegged at more than $2 billion, Bloomberg News reported at the time. The process was paused in April this year after a Saudi-Russian oil price war and the global pandemic that savaged demand.

Assets are now starting to return to market, with Exxon Mobil Corp. resuming plans to offload its North Sea oil fields, people with knowledge of the matter have said. French major Total SE made a similar divestment in the region in August.

Shares of Centrica have fallen almost 50% this year, giving the company a market value of about 2.7 billion pounds ($3.6 billion). It owns 69% of Spirit Energy, which is a joint venture with Munich municipal utility Stadtwerke Muenchen GmbH and German gas supplier Bayerngas GmbH.

According to sales documents issued last year and seen by Bloomberg, Centrica’s intention was to sell its full stake for cash. Spirit Energy operated more than 30 fields and a dozen development projects, which produced around 130,000 barrels of oil equivalent a day in 2018, the documents show. Output, which is two-thirds gas, is expected to be maintained above 100,000 barrels through to 2025.

Centrica booked a 381 million-pound impairment charge in the first half on its exploration and production assets, which include Spirit Energy, due to falling oil and gas prices. Spirit Energy’s adjusted operating profit fell by 63% to 33 million pounds in the six months through June.

©2020 Bloomberg L.P.

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