1 October 2008 – LAWFUEL – Legal Announcements – Our energy team recently advised Centrica plc on the acquisition of Caythorpe Gas Storage Limited (CGSL) from Warwick Energy for £70 million in cash. CGSL owns the onshore Caythorpe gas producing field near Bridlington in East Yorkshire, which is a substantially depleted onshore gas field located close to the National Transmission System.
On conversion to a storage facility, Caythorpe is expected to have a capacity of up to 7.5 billion cubic feet (bcf) of gas. The project will require additional capital investment of around £100 million and could be operational by the winter of 2011/12.
Crucially, unlike many similar projects elsewhere in the UK, the Caythorpe project already enjoys planning permission. Once completed the new facility, which will be one of the main UK storage facilities, will enhance the security of gas supply to the UK market. The facility will have a much faster injection and withdrawal rate than Centrica’s Rough gas storage facility, which is offshore from Easington.
Herbert Smith has recently advised E.ON, Gaz de France and WINGAS on similar transactions as well as acting on the development of a number of ongoing gas storage projects in the UK and continental Europe.
A combined Herbert Smith corporate and real estate team was led by John Geraghty and Iain Rothnie, with assistance from Simon Tysoe and Deborah Dove (corporate) and Lydia Kent-Smith, James O’Shea (real estate) and Henry Longbottom (planning). Isaac Zailer advised on tax aspects assisted by Jaspal Pachu.
Merrill Lynch acted as Warwick’s financial advisers and facilitated the transaction. Warwick was advised on the corporate aspects of the disposal by Linklaters and on property matters by Martineau.
John Geraghty commented:
“We were delighted to have the chance to act for Centrica Storage on this strategically important acquisition. It builds on our market-leading track record of storage project acquisitions and on our relationship with Centrica.”