Eon to back out of North Sea business

German energy giant Eon is planning to back out of its business interests in the North Sea, selling £1 billion-worth of assets.

The company is undergoing a massive strategic overhaul including the spin-off of a large part of its fossil fuel and conventional generation business, to allow a greater focus on innovative technologies and its consumer business.

According to weekend press reports, the company is currently considering a one-off disposal of its offshore assets, as against a piecemeal approach, with Siccar Point Energy named as a potential buyer.

Analysts at RBC Capital said the reports “should come as no surprise” given Eon’s stated intention last November to consider a disposal of its E&P assets.

Eon announced a major strategy overhaul late last year with plans to split its business operations between new emerging energy market trends, and the continued need for conventional security of supply.

The company said it will focus on emerging energy innovations including renewables, distribution networks and customer solutions; while a new spin-off business, to be set up by 2016, will manage the group’s conventional power generation, energy trading an upstream activities.

“Eon currently has interests in fields such as Elgin/Franklin, Huntington and Babbage as well as assets in the Norwegian Sea. In total the assets produced 22.4 million [barrels of oil equivalent] in 2014, but this is likely to fall to sub 20million boe in 2015,” the analysts said.

Eon chief exeuctive Johannes Teyssen said in the company’s latest financial report that the spin-off plans are “making good progress”, and promised further details in the second quarter.