Lotos to Buy Centrica’s Oil Assets for $175.8 Million

Grupa Lotos SA, Poland’s second-biggest refiner, agreed to buy Centrica Plc (CNA)’s oil and gas exploration assets in the Norwegian part of the North Sea for $175.8 million as part of its foreign expansion.

The state-controlled refiner will buy 14 stakes ranging from 5 percent to 50 percent in licenses linked to the Heimdal hub, the Gdansk, Poland-based company said in a regulatory filing today. Three of the fields already produce oil and gas and their output accounting for Lotos’s stake is about 5,000 barrels a day, or almost double the company’s production.

Lotos has been on the lookout for exploration assets in Norway to reclaim losses it made on the North Sea Yme oil field. In the previous two years the company wrote down a total of 1.18 billion zloty of the value of its 20 percent stake in the Yme license after it failed to start production due to a crack in the platform. Today’s acquisition will allow Lotos to regain about two-thirds of the 1.07 billion-zloty tax it paid for Yme by 2016, Lotos said in the statement.

“Due to the unclear future of Yme, we believe that this is the right strategy for Lotos to pursue in order to be able to monetize its tax assets within the foreseeable future,” Robert Rethy, an analyst at Wood & Co., said in a research note today. The deal “may be taken positively by the market, as it should finally put an end to the speculation regarding Lotos’s Norwegian strategy.”

Lotos shares jumped 4 percent to 40.24 zloty at 9:56 a.m. in Warsaw, trimming this year’s decline to 2.7 percent and valuing the company at 5.2 billion zloty ($1.68 billion).

The acquisition comes two months after PKN Orlen SA, its bigger domestic competitor, agreed to buy Canada’s TriOil Resources Ltd (TOL) to gain access to foreign oil deposits.

The stake in Heimdal gives Lotos access to additional 9 million barrels of oil equivalent of proven and probable reserves.

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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