Centrica is giving up its stake in Cuadrilla’s shale gas licence in the Fylde near Blackpool.
News of the withdrawal came in a statement today from Cuadrilla’s Australian owners, the mining group AJ Lucas.
The statement said the stake, now held by Centrica’s subsidiary Spirit Energy, would be transferred back to AJ Lucas for a “nominal sum”.
In the original deal, Centrica paid £40m up front and committed to contribute £60m to exploration costs.
The agreement allowed Centrica to return the 25% interest when it had invested up to an agreed level.
AJ Lucas, which owns 93% of Cuadrilla, said today this “originally agreed level has in fact been surpassed by some margin”.
The statement said the withdrawal was subject to approval from regulators and was not expected to be completed until the final quarter of 2020.
It said Spirit remained liable for its 25% share of the future decommissioning costs of the wells drilled in the licence.
The chairman of AJ Lucas, Phil Arnall, said the move was part of “a broader series of actions” by Centrica, including the sale of Spirit energy:
“Centrica and its subsidiary Spirit have been excellent partners as we explored and proved up a huge, high quality, natural gas resource in the UK Bowland shale.
“Whilst we are naturally disappointed to see them withdraw, we understand that this is part of a broader re-alignment of Centrica as it focuses on its downstream UK gas supply business and exits upstream oil and gas.”
“We remain confident that domestic shale gas can and will be a valuable source of energy for the UK. Coupled with other initiatives it will, we believe, prove an essential element of the lowest cost transition to UK “Net-Zero” carbon by 2050 goal.”
Last week, AJ Lucas predicted that the government moratorium on fracking in England, imposed in November 2019, would be lifted but not before 2021.
Earlier this year, the New York private equity firm, Riverstone, sold its stake in Cuadrilla to AJ Lucas.