London — The UK's Centrica announced Tuesday plans to exit oil and gas production, selling its majority stake in the recently formed Spirit Energy, to become a pure-play gas and power utility.
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Centrica, which has already announced plans to dispose of its nuclear power generation interests, said it expects to sell its 69% stake in UK-based Spirit Energy by the end of 2020.
"[Exploration and production] is not strategically core for Centrica and our intended exit from Spirit Energy is aligned with the global transition to a lower-carbon energy mix," Centrica said in a quarterly earnings statement.
Formed in 2017 from the upstream businesses of Centrica and the Norwegian subsidiary of Germany's Bayerngas, Spirit's upstream assets include producing fields the UK and Dutch North Sea, the UK's offshore Morecambe Bay gas fields and producing assets off Norway.
Centrica said Spirit's oil and gas production in the first half of 2019 slipped 2% year on year to 24.5 million barrels of oil equivalent as gas volume growth was offset by lower liquids production. It said Spirit's average production this year is expected to be broadly in line with the 57.9 million boe of 2018.
Centrica said it will continue to own and operate the UK's Rough gas field and the onshore Easington gas processing terminal with a focus on "maximizing the value of both of these assets."
The proceeds from the Spirit Energy and nuclear divestments will be used to reduce its net debt, which stood at GBP3.38 billion ($4.11 billion) at the end of the first half, itsaid.
Centrica also announced that the first exploration well targeting the Warwick oil prospect in the Greater Warwick Area, West of Shetland found oil shows that were uncommercial.
Spirit farmed into the licence operated by Hurricane Energy last year with a 50% stake, to help Hurricane expand its West of Shetland projects.
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