Repsol and private equity-backed NEO Energy agreed to merge their UK North Sea oil and gas operations, forming a new joint venture named NEO NEXT.

The combined business will produce around 130,000 barrels of oil equivalent per day in 2025.
The new entity will be majority-owned by NEO Energy with a 55% stake, while Repsol will hold 45%. Repsol expects the merger to generate over $1bn in synergies, significantly boosting cash flow and shareholder returns.

The deal marks the latest in a wave of consolidation among North Sea producers, many of whom are repositioning in response to the UK government’s windfall tax on energy profits imposed in 2022.

“This company will be very well positioned to pursue both organic and inorganic growth,” said NEO UK chairman John Knight, signalling that more acquisitions could follow.

The transaction is expected to close by September and follows Repsol’s move last year to gain full control of its previous North Sea joint venture with Sinopec, ending a years-long arbitration process.