Spanish energy giant Repsol and Aberdeen-based NEO Energy have decided to merge their assets in the UK part of the North Sea.
Under the terms of the transaction, the combined business will be jointly owned by NEO, which will hold 55% of a newly created joint venture company, while Repsol’s UK arm will hold the remaining 45%. The deal is set to be completed during the third quarter of 2025.
The new company, called NEO NEXT Energy Limited, will have an output of around 130,000 boepd this year. Repsol said that it was aiming for financial benefits from the merger of more than $1b, improving cash generation and shareholder returns.
“The benefits of synergies from consolidation will create much stronger value creation, profit and cash flow yield for shareholders and more options for capital allocation decisions well into the next decade. 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,” said John Knight, Chair of NEO Energy.
Repsol will retain $1.8bn of the decommissioning liabilities related to its legacy assets, enhancing the cash flows of the combined business.
Repsol used to own its North Sea assets through a joint venture with China’s Sinopec. In 2023, the Spanish firm ended years-long arbitration with Sinopec, which saw the Spanish company acquire the remaining 49% of the joint venture, giving it full control of the assets.
This consolidation of assets by NEO Energy and Repsol is the latest in a series of such moves done by other operators in the North Sea. Some of those moves were done following the British government’s imposition of a windfall.
Ithaca Energy and Italian major Eni merged their UK upstream assets in October 2024, while Shell and Equinor also announced they were combining their North Sea assets. Harbour Energy took over all upstream assets of Wintershall Dea, and there are talks of EnQuest taking over Serica Energy.
