Centrica plc, the parent company of British Gas, has reached an agreement with ConocoPhillips to acquire its non-operated interests in the gas and oil producing Statfjord field and associated satellites for a total cash consideration of $223 million (£142 million), including $103 million (£66 million) attributable to historic tax allowances.

The fields, which are located across both the Norwegian and UK sectors of the Northern North Sea, produce gas for the UK market. The acquisition further strengthens Centrica’s integrated business model and provides another secure source of gas for our UK customers.

The deal will see Centrica acquire a further 15.17% interest in the field which, combined with its existing equity interest, will increase its overall stake in this core asset to 34.30%. It will also see the company increase its interest in the Statfjord satellites (Statfjord Nord, Statfjord Øst and Sygna), all of which are producing fields tied back to Statfjord. The gas produced from these fields is either uncontracted or already contracted to Centrica and is directly linked to the UK market.

The acquisition adds material long-term production to Centrica’s portfolio, providing additional reserves of 36 million barrels of oil equivalent (mmboe), an increase of about 9% split approximately 60% liquids and 40% gas. The resulting net increase in production will be over 11,000 boe per day, with production weighted towards liquids in the early years. Field development costs of approximately £200 million relating to the acquired interests will be required to maximise the long-term recoverable reserves from these fields and the acquisition is expected to generate strong immediate earnings and cashflow.

Mark Hanafin, Managing Director of Centrica Energy, said:

“Increasing our stake in Statfjord marks the latest stage in our drive to secure high quality sources of gas for our customers, adding both earnings and long-term value to Centrica. The acquisition, which follows our announcement last year of a new 10 year gas supply deal with Norway and acquisition of assets from Statoil, underlines our commitment to invest in North Sea production and secure future energy supplies for the UK.”