The Windsor, U.K-based company will pay 40 million pounds ($63 million) in cash for the share in the licenses in Lancashire, according to an e-mailed statement today. Centrica will also pay exploration costs of as much as 60 million pounds.
The deal makes Centrica the biggest company to enter the fledging shale industry in the U.K., where exploration was held up after Cuadrilla’s drilling caused two earth tremors in 2011. The company says its licenses may hold 200 trillion cubic feet of gas. At an extraction rate of 30 percent, the maximum seen in U.S. shale fields, that would be enough to increase U.K. reserves more than eightfold.
“With North Sea gas reserves declining and the U.K. becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources,” Mark Hanafin, Centrica’s managing director, said in the statement.
Centrica will buy the stake from Cuadrilla and its partner, Australian engineer AJ Lucas Group Ltd. (AJL) After the deal, Cuadrilla will hold 56.25 percent of licenses, Centrica 25 percent and AJ Lucas 18.75 percent.
Jefferies Group LLC acted as sole financial adviser to Cuadrilla. Allen & Overy was legal adviser.
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