NEO Energy and Repsol Resources UK have entered into strategic merger, creating one of the largest U.K. North Sea independent oil and gas companies under the name of NEO NEXT.
Under the terms of the transaction, the combined business will be jointly owned by NEO (55%) and Repsol UK (45%) and will have a large and diverse asset portfolio which is expected to generate material cashflows and provide a platform for organic and inorganic growth.
Repsol will retain $1.8 billion of the decommissioning liabilities related to its legacy assets, enhancing the cash flows of the combined business.
The combined group will be renamed NEO NEXT Energy Limited (NEO NEXT) and is expected to become one of the largest producers in the region.
The new joint venture has a projected 2025 production of approximately 130,000 barrels of oil equivalent per day (boe/d).
NEO NEXT will operate a highly diversified portfolio, including 11 production hubs and substantial undeveloped reserves.
Repsol UK holds interests in 48 oil and gas fields, while NEO UK operates several key assets in the Central North Sea, including interests in major hubs like Shearwater, Britannia Area, and Elgin Franklin.
The leadership of new joint venture will be guided by a joint executive team, representing both Repsol UK and NEO UK. The governance structure will be balanced, with members of the company board to comprise members nominated by Repsol UK and NEO Energy Holdings Limited (an investment vehicle managed by HitecVision), as well as independent directors.
Completion of the transaction remains subject to approvals from the relevant authorities and regulatory consents and is expected during the third quarter of 2025.
“This combination will create a jointly governed business which will call upon the key strengths of both shareholders. 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,” said Francisco Gea, CEO of Repsol E&P.
“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,” added John Knight, Chair of NEO Energy.
