Spanish oil company Repsol and private equity-backed NEO Energy have announced a strategic merger of their UK North Sea oil and gas businesses, forming a joint venture named NEO NEXT.
The newly established company is expected to produce approximately 130,000 barrels of oil equivalent per day in 2025.
Under the terms of the agreement, NEO Energy will hold a 55% stake in NEO NEXT, while Repsol will retain 45%. The merger is projected to generate financial synergies exceeding $1 billion, enhancing cash flow and shareholder returns. Repsol will also retain $1.8 billion of decommissioning liabilities related to its legacy assets, further strengthening the financial position of the combined entity.
This consolidation follows a broader trend of mergers among North Sea producers as companies navigate the evolving regulatory landscape. The British government’s imposition of a windfall tax in response to the 2022 surge in energy prices has led many firms to restructure and seek new growth opportunities both within and beyond the region.
John Knight, Chairman of NEO UK, emphasized the strategic importance of the merger: “This company will be well-positioned to pursue both organic and inorganic growth. We will certainly look to make more value-accretive acquisitions.”
Francisco Gea, CEO of Repsol E&P, echoed these sentiments, stating: “This combination will create a jointly governed business leveraging the strengths of both shareholders. Repsol brings operational expertise in production, development, and decommissioning, while NEO Energy excels in financial and commercial matters.”
The transaction is expected to be completed by the third quarter of 2025, subject to regulatory approvals.
About NEO Energy: NEO Energy is a leading independent operator in the UK Continental Shelf (UKCS) with a diversified asset portfolio. The company is committed to revitalizing the North Sea’s oil and gas sector through operational efficiency, safety, and long-term value creation. NEO Energy is wholly owned by NEO Energy Holdings Limited, an investment vehicle managed by HitecVision.
About Repsol UK: Repsol UK has been a key operator in the North Sea for decades, holding interests in 48 oil and gas fields. It operates as part of Repsol E&P Group, which has a presence in 13 countries and produced over 570,000 barrels of oil equivalent per day in 2024.
With the formation of NEO NEXT, both companies aim to strengthen their market position and drive sustainable growth in the evolving energy sector.
