MADRID (Reuters) -Spanish oil company Repsol and private equity-backed NEO Energy have agreed to merge their UK North Sea oil and gas businesses to create a joint venture with output of around 130,000 barrels of oil equivalent per day this year.
The new company, called NEO NEXT, will be 45%-owned by Repsol and 55%-owned by NEO Energy. It is aiming for financial benefits from the merger of more than $1 billion, improving cash generation and shareholder returns, Repsol said on Thursday.
The tie-up is the latest consolidation by companies that operate in the basin, with North Sea producers merging and seeking to diversify away from the region after the British government imposed a windfall tax in the wake of a 2022 surge in energy prices.
Reuters reported last year that the two companies were in talks on a deal to merge North Sea operations.
More deals could be in the pipeline.
“This company will also be very well positioned to choose both organic and inorganic growth,” John Knight, NEO UK chairman, said. “We will certainly look to be making more value accretive acquisitions.”
The deal should be completed by September.
In 2023, Repsol ended years-long arbitration with China’s Sinopec which saw the Spanish company acquire the remaining 49% of their North Sea joint venture, giving it full control of the assets.
(Reporting by Pietro Lombardi and Inti Landauro; Editing by Jan Harvey and Jane Merriman)
