will be borne by Spirit Energy and there is an estimated approximately £40 million cost of closing commodity price hedges at a Centrica Group level related to its share of Spirit Energy’s Norwegian Business and Statfjord Norway Interests. In addition, an estimated approximately £140 million cost of closing commodity price hedges related to Statfjord U.K. SWM Group’s share of this distribution from Spirit Energy is expected to be approximately £250 million. Spirit Energy will distribute the Net Consideration and Net Cash Flow to Centrica and its joint venture partners, SWM Group, in proportion to their ownership, after adjusting for certain transaction taxes and costs and amounts in respect of certain liabilities to be retained by the Spirit Energy Group. Whilst significantly dilutive to earnings in the near term, all decommissioning liabilities related to the Sale Business and Interests will be transferred to the buyers as part of the transaction. As of 31 October 2021, the Sale Business and Interests had generated £376 million of net cash flows since 1 January 2021. It will also be reduced for net post-tax cash flows generated by the Sale Business and Interests since 1 January 2021, adjusted for any remaining tax payable on these net cash flows to be paid by the Spirit Energy Group (the “Net Cash Flow”). The consideration payable at closing (the “Net Consideration”) will be subject to customary adjustments to reflect working capital and debt like items. The transaction has a commercial effective date of 1 January 2021 with headline consideration of $1,076 million (equivalent to approximately £800 million) in cash on a debt free, cash free basis, plus a deferred commodity price linked contingent payment. I remain excited about our future, as we continue to focus on creating shareholder value and delivering for our customers by helping them live sustainably, simply and affordably."Ĭentrica plc (“Centrica” or the “Company” or the “Group”) announces that, in line with the Group’s stated strategy, subsidiaries of the 69% Centrica owned Spirit Energy Limited (“Spirit Energy”) group (“Spirit Energy Group”) have entered into agreements to sell the Spirit Energy Group’s Norwegian oil and gas exploration and production business excluding the Statfjord field to Sval Energi AS (“Sval”) and its interests in the Statfjord field to subsidiaries of Equinor ASA (“Equinor”) (the “Sale Business and Interests”). This sale is another important milestone in the turnaround of Centrica and follows our significant organisational restructure last year and the sale of Direct Energy earlier in 2021. Spirit will effectively be in run-off, and we will not explore for new hydrocarbon reserves rather, we will focus on ensuring Spirit can fund its decommissioning liabilities whilst pursuing opportunities to leverage existing infrastructure to help the UK on its path to net zero. With the disposal of these largely oil producing assets to buyers who will be able to meet the material decommissioning costs, we can now focus on realising value for our shareholders from Spirit’s remaining gas reserves. "We are pleased to continue to bring focus to Centrica’s portfolio with these transactions, which are aligned with our strategy to reduce our exposure to carbon intensive oil and gas exploration and production in a way that maximises shareholder value. Amount of Net consideration dependent on date of completion, currently expected in Q2 2022.Centrica’s 69% share of proceeds expected to be c.£560m.Amended Shareholder Agreement focuses Spirit Energy on UK gas production & decommissioning.All c.£830m of decommissioning liabilities transfer to the buyers, Sval Energi and Equinor.In addition, related commodity price hedges will be closed at a total pre-tax cost of c.£180m.Net consideration to be reduced by cash flows retained from to completion.Headline consideration to Spirit Energy of c.£800m with commercial effective date.Disposal of entire Norwegian portfolio plus the Statfjord field.Centrica announces major progress on strategic transformation with the sale of Spirit Energy’s Norwegian oil and gas assets and run-off strategy for the remaining Spirit Energy business
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