British Gas owner Centrica is outperforming a falling market after it announced a couple of key deals with Norway's Statoil.
The UK group has signed a 10 year, £13bn deal to buy 5bn cubic metres of gas a year from Statoil, and is also paying a package of oil and gas development assets in the North Sea for up to £1bn. The supply deal represents around 5% of the UK's annual gas needs - enough for 3.5m homes - and the asset purchase lifts Centrica's annual production by around 25%.
Centrica's shares have dipped 0.2p to 288.7p, but Angelos Anastasiou at Investec issued a buy note and said:
We believe that these are good moves that will underpin Centrica's position on both the upstream and downstream side. Confidence still needs to be regained in the UK supply market for full confidence in the shares to be achieved. However we believe that the share price is now factoring in unreasonably pessimistic scenarios on the supply side, and that Centrica is underpinned by strong cashflow, good earnings per share and dividend per share growth, and undemanding multiples.
