Energy companies Repsol and NEO Energy have reached an agreement to combine their oil and gas operations in the North Sea, forming a joint venture.
The newly established entity, named NEO NEXT, will be owned 55% by the Spanish company Repsol and 45% by the private equity-supported NEO Energy, as reported by Reuters.
Repsol aims to achieve financial gains exceeding £1 billion from this merger, enhancing cash flow and returns for its investors. John Knight, chairman of NEO UK, indicated that additional partnerships may be in the pipeline.
Francisco Gea, CEO of Repsol E&P, said: “This combination will create a jointly governed business which will call upon the key strengths of both shareholder. Repsol contributes operational capabilities on production, development, and decommissioning activities which will be combined with NEO Energy expertise on financial and commercial matters. We believe this combined business has many more opportunities for profitable growth in the basin and beyond.”
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John Knight, chairman of NEO UK, added” “The combined company has much more scale and diversity and opportunities for cost consolidation and portfolio high-grading, giving resilience despite the tough conditions in the UK. But this company will also be very well positioned to choose both organic and inorganic growth. We will certainly look to be making more value accretive acquisitions.”
The merger, subject to regulatory approvals, is expected to be completed by the third quarter of 2025. This deal marks a significant trend of consolidation among North Sea operators, as companies seek to diversify their portfolios following the British government’s introduction of a windfall tax in response to rising energy prices.
This announcement follows Shell and Equinor’s declaration of a similar merger involving North Sea oil and gas assets back in December.
