Centrica Acquires 25% Stake in Cuadrilla’s Shale Exploration Licence

The UK-based Centrica, which owns British Gas, has acquired a 25% interest in the Bowland shale exploration licence in Lancashire from Cuadrilla Resources and AJ Lucas for £40 million in cash.

Under the agreement, Centrica will then pay exploration and appraisal costs of up to £60 million. A further contingent payment of £60 million will be paid by Centrica ‘subject to certain operational milestones having been reached.’

“With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK,” explained Mark Hanafin, Managing Director of Centrica’s International Upstream business.

According to Cuadrilla, the announcement is a milestone for shale gas developments in the UK.

“Today’s announcement represents a significant step in our on-going exploration programme for natural gas within the Lancashire Bowland Basin,” comment Francis Egan, Cuadrilla’s CEO.

Cuadrilla’s shareholder AJ Lucas Group said earlier this year that the British pioneer of shale gas mining in Britain was negotiating a farm-in-agreement with a leading energy company. AJ Lucas did not name the potential investor.

Cuadrilla’s Bowland Basin in northwest England holds about 200 trillion cubic feet of gas, the company has said, although only a fraction of that will be recovered.

“The Government’s clear commitment to developing the UK’s shale gas industry is creating the right environment for companies to invest and to deliver those benefits,” added Hanafin.

The British government lifted moratorium on hydraulic fracturing at the end of last year, paving the way for companies to begin drilling wells and tap into shale resources.