Centrica share price: Group mulls tie-up with Engie’s oil & gas unit

on Apr 4, 2016
Updated: Oct 21, 2019

Centrica (LON:CNA) is in early-stage talks over a potential tie-up with the oil and gas production arm of France’s state-backed energy giant Engie, The Sunday Times has revealed. The move would come with the British Gas owner’s chief executive Iain Conn looking to turn around the group’s fortunes amid the ongoing oil price weakness.

Centrica’s share price closed deep in the red on Friday, shedding 1.23 percent to 224.90p and underperforming the broader London market. The group’s shares have lost 11.18 percent of their value over the past year, but are up 3.12 percent in the year-to-date.
The Sunday Times reported yesterday that Centrica was understood to have hired JPMorgan to advise it on its options in relation to the oil and gas production arm of Engie, which changed its name from GDF Suez last year. The two companies are joint owners of one of the largest gas fields in the North Sea, called Cygnus. The newspaper notes that a combination with Engie’s oil and gas arm, perhaps under a new joint venture vehicle, would allow both companies to reduce costs by cutting overlap and extracting better terms from suppliers. It, however, remains unclear whether a deal will be struck.

Analysts meanwhile remain mostly upbeat on Centrica, with RBC Capital reiterating its ‘outperform’ rating on the stock on Friday, with a price target of 280p. Last month, Deutsche Bank reaffirmed the British Gas owner as a ‘hold,’ valuing the stock at 200p, while BNP Paribas remains bullish on the FTSE 100 group with an ‘outperform’ stance and a price target of 250p. Centrica is scheduled to issue a trading update on April 18, when the company will also hold its annual general meeting.
As of 07:51 BST, Monday, 04 April, Centrica PLC share price is 224.90p.