Centrica in "Advanced Talks" to Buy Stake in Cuadrilla UK Shale -Source

By Selina Williams

LONDON--U.K. utility Centrica PLC (CNA.LN) is "in advanced talks" to buy a stake in U.K. shale gas explorer Cuadrilla Resources Ltd.'s Bowland shale licenses in England, a person familiar with the matter said Friday.

Cuadrilla investor AJ Lucas Group Ltd. (AJL.AU) confirmed it was in discussions with "a number of parties" and was "confident of a positive outcome," but didn't name any counterparties to the talks.

If successful, the deal would be the first foray of a major company into the U.K.'s nascent sector, underscoring the growing interest in the country's shale gas reserves as the government seeks to replicate the North American shale gas revolution that has transformed the U.S. energy market.

AJ Lucas said in a statement that discussions are continuing with a number of parties in respect of a potential farm-in or similar type of investment in the Bowland shale prospect in Lancashire in northwest England.

The person familiar with the matter said a potential agreement is weeks away, rather than months away.

There has been no commercial shale gas production in the U.K. so far and shale exploration is still at an early stage in the U.K., making a reliable estimate of the country's reserves difficult.

Cuadrilla estimates that the Bowland Shale holds 200 trillion cubic feet of gas resources, but says it needs to do more work before it can say how much of that resource is recoverable.

Cuadrilla, which is the only company using the controversial technology to explore for shale gas onshore in the U.K., halted fracking in May 2011 after two small seismic tremors were detected near their operations.

Cuadrilla is owned by U.S. private equity firm Riverstone LLC and Australian mining group AJ Lucas and management.

Write to Selina Williams at [e-mail]; Twitter: @selinawilliams3