SSE plc, the Perth-based renewable energy and networks giant, said on Tuesday it agreed to sell its portfolio of gas exploration and production (E&P) assets to Viaro Energy via its subsidiary RockRose Energy Limited for up to £120 million.

As part of the transaction, SSE said it “will retain an obligation” to pay 60% of decommissioning costs.

The net present value of estimated decommissioning costs is £390.1 million.

SSE said it currently expects to make a “small gain” on the sale.

The Perth firm said the sale “clearly comes at a difficult time for the E&P sector, and the economy as a whole, but we believe it is the right move for our shareholders” as SSE focuses its resources on its core low-carbon businesses.

SSE said the £120 million price comprises £25 million in cash, payable at completion, with the remainder, adjusted for leakage, “forming a vendor loan (repayable three years from completion accruing interest at 7.125%).”

An additional consideration of up to £40 million is payable if the gas price in H2 2021 reaches agreed thresholds.

“The transaction is based on a ‘locked box’ economic date of 31 March 2019 and is subject to regulatory approval and partner consent,” said SSE.

“The diverse portfolio comprises non-operational equity shares in over 15 producing fields in three regions in the North Sea: the Easington Catchment Area, the Bacton Catchment Area, and the Greater Laggan Area.

“As part of the transaction, SSE will retain an obligation to pay 60% of the decommissioning costs, payable as the decommissioning of the assets occurs.

“SSE has stated for some time that its financial investment in E&P assets is a non-core activity and ultimately not aligned with its strategic focus on reaching net-zero emissions.

“This sale is part of SSE’s strategy to refocus its investment on its core networks and renewables businesses, with plans to invest £7.5bn in low-carbon energy infrastructure over the next five years and to treble its renewable electricity output by 2030.

“The company has so far secured over £1.4bn from the disposal of non-core assets as part of its £2bn-plus disposal programme by autumn 2021.

“Today’s announcement follows recent agreements to sell its share in energy-from-waste venture Multifuel Energy Limited for £995m, its non-operating stake in Walney Offshore Wind Farm for £350m, and its equity interest in meter asset provider MapleCo for £90m.”

SSE finance director Gregor Alexander said: “We have said for some time that gas exploration and production assets are inconsistent with our future ambitions and vision to be a leading energy company in a net-zero world.

“This sale clearly comes at a difficult time for the E&P sector, and the economy as a whole, but we believe it is the right move for our shareholders as we focus our resources on our core low-carbon businesses.

“It represents further progress on our strategy to dispose of non-core assets as we look to invest £7.5bn in essential low-carbon energy infrastructure over the next five years, driving the UK’s transition to a net-zero future.”