Centrica buys 25% stake in Bowland exploration licence in England

UK-based energy utility Centrica has acquired a 25% interest in the PEDL165 or Bowland exploration licence in Lancashire, England, from Cuadrilla Resources and AJ Lucas for £40m in cash.

Centrica will also pay exploration and appraisal costs, capped at £60m.

The acquisition includes two subsidiary entities in the licence, one each from Cuadrilla and AJ Lucas.

Cuadrilla is the operator of the Bowland licence, where three exploration wells have been drilled to date.

The data received from the three drilled wells has confirmed the thickness of the shale formation and the existence of natural gas.

The Bowland Shale licence is expected to hold about 200 trillion cubic ft (tcf) of gas, according to initial data.

Centrica International Upstream business managing director, Mark Hanafin, said that it was important to develop domestic gas resources as the UK becomes more dependent on imported gas supplies.

"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," Hanafin added.

"This transaction presents an attractive opportunity for Centrica to explore the potential and commercial viability of natural gas from shale in the UK, while utilising its expertise as a responsible operator and developer of UK gas resources."

On 10 June, Centrica carried out negotiations with Cuadrilla Resources about acquiring a stake in the Bowland shale licence.

In January Centrica announced that shale gas would not be a game changer for the UK like it was in North America. The company dismissed speculation that it might soon start shale gas drilling.

In March, the UK government introduced a series of new tax breaks in its 2013 budget to encourage shale gas exploration in the country.