Repsol and NEO Energy to Merge UK North Sea Assets

Spanish energy giant Repsol and Aberdeen-based NEO Energy have announced a merger of their assets in the UK sector of the North Sea. The joint venture, named NEO NEXT Energy Limited, will see NEO holding 55% ownership while Repsol’s UK arm will retain 45%. The deal is expected to be finalized in the third quarter of 2025.

The combined business is projected to have an output of approximately 130,000 barrels of oil equivalent per day in the current year. Repsol anticipates over $1 billion in financial benefits from the merger, which will enhance cash generation and shareholder returns.

John Knight, Chair of NEO Energy, highlighted the value creation and growth opportunities resulting from the consolidation. He stated, “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.”

Repsol will retain $1.8 billion of decommissioning liabilities associated with its legacy assets, thereby improving the cash flows of the combined entity. The Spanish company previously held its North Sea assets through a joint venture with China’s Sinopec, with Repsol acquiring full control of the assets in 2023 following the resolution of arbitration.

The consolidation of assets by NEO Energy and Repsol reflects a trend in the North Sea region, with other operators also engaging in similar moves. Ithaca Energy and Eni merged their UK upstream assets, while Shell and Equinor announced a combination of their North Sea holdings. Harbour Energy acquired all upstream assets of Wintershall Dea, and there are discussions of EnQuest taking over Serica Energy.