Bullish Centrica eyes fresh move on US markets

SCOTTISH Gas-owning Centrica will hit the acquisition trail in America over the next few years, the energy group revealed yesterday as it booked a two-thirds surge in first-half profits to £1.6 billion.

• Picture: PA

The much better trading performance included a near-doubling of profits at Scottish/British Gas's household energy business as a result of the exceptionally harsh winter, and the acquisition last year of Aberdeen-based energy explorer Venture Production as well as a 20 per cent stake in French-owned nuclear group British Energy.

Sam Laidlaw, Centrica's chief executive, said the company was "very pleased" with how the integration of Venture had gone, with the group ahead of its production targets.

Centrica made its 1.3bn hostile move on the Scots firm, attracted by the biggest independent gas reserves in the UK area of the North Sea.

The integrated UK "upstream" exploration and production division's profits rose 45 per cent to 485m, as its HQ was moved to Aberdeen, where it now employs more than 200.

On acquisitions, Laidlaw said the accent would be on North America over the next three to five years, plus some potential "infill acquisitions" in the UK.

Centrica's Direct Energy business in North America doubled profits to 139m in the period, but Laidlaw said currently only 15 per cent of the energy supplied came from the British group's own sources.

"We would like to get this to 35 to 40 per cent over the next three to five years," he said.

Nick Luff, Centrica's finance director, said the industry consolidation climate would help Centrica's ambitions for growth.

"The market's pretty active at the moment, and we've seen quite low gas prices in North America. That is beginning to be reflected in asset prices and so there are some deals to do," Luff said.

Centrica would not comment on whether it was interested in any of the $30bn (19bn) of assets BP put on the sale block earlier this week to help restore its balance sheet after the $32bn charge set aside to deal with the Gulf of Mexico oil spill.

During the period, British Gas Residential, which cut prices for customers three times over the past 18 months, made a profit of 585m (up from 295m). Profit from British businesses jumped 128 per cent to 148m.

Centrica said that during the first six months of the year it had added 331,000 customer accounts, including 223,000 in household energy.

The company said it expected results for 2010 to be "heavily weighted" towards the first half, although they would be in line with market expectations.

Laidlaw said Centrica would invest 1.5bn in the business this year to help the industry move to a much lower carbon footprint and "secure supplies for the second half of the decade". The interim dividend rises 4.9 per cent to 3.84p.

l BG Group, the production business created following the 1997 demerger of British Gas, reported a 19 per cent rise in underlying Q2 profits to $899m (576m) yesterday.

The company said this was due to higher oil and gas prices although its actual gas production fell.