Editor’s note: The headline has been corrected to clarify that Repsol ( REPYF ) and NEO Energy are forming a joint venture

Repsol S.A. ( REPYF )‘s (OTC:REPYY) Repsol Resources UK disclosed a strategic merger deal with NEO Energy (NEO) on Thursday, creating a major independent producer in the North Sea.

The newly merged entity will be rebranded as NEO NEXT Energy Limited.

As per the deal, the merged entity will be co-owned by NEO (55%) and Repsol UK (45%), with Repsol ( REPYF ) retaining $1.8 billion in decommissioning liabilities from its legacy assets.

With the transaction, the new entity will operate a highly diversified portfolio, including 11 production hubs and substantial undeveloped reserves.

The new venture is expected to produce an estimated around 130,000 barrels of oil equivalent per day (boe/d) in the UK Continental Shelf (UKCS) in 2025.

The newly merged entity aims to achieve synergies surpassing $1 billion.

The transaction is expected to be completed in the third quarter of 2025, upon necessary regulatory approvals and consents.

Francisco Gea, CEO of Repsol E&P said, "This combination will create a jointly governed business which will call upon the key strengths of both shareholders. Repsol ( REPYF ) contributes operational capabilities on production, development, and decommissioning activities which will be combined with NEO Energy expertise on financial and commercial matters."

John Knight, Chair of NEO UK, added, "The benefits of synergies from consolidation will create much stronger value creation, profit and cash flow yield for shareholders and more options for capital allocation decisions well into the next decade.

Read Next:

BP Sells Austrian Mobility Business, Finalizes Redevelopment Deal For Kirkuk Fields In Iraq