Allen & Overy (A&O) and Norton Rose Fulbright have won leading roles on a £160m deal that has seen Centrica make its entrance into the closely watched UK shale gas market.

Centrica, which owns British Gas, has taken a 25% stake in the Bowland shale gas exploration licence in Lancashire after negotiations with UK shale gas explorer Cuadrilla Resources and Australian engineering group AJ Lucas, which previously held 75% and 25% stakes respectively in the fracking fields.

A&O won a first-time mandate for Cuadrilla on the deal following a competitive process. The magic circle firm's London-based team was led by corporate partner John Geraghty, with support from tax partner Lydia Challen.

Geraghty said: "Shale development is relatively new to the UK so the deal had some unique and complex challenges. If you look to America, shale deals account for a large percentage of the market; while the UK won't be seeing activity on a similar scale, there is potential for a significant number of deals to take place over the medium term."

Norton Rose Fulbright acted for Centrica with a team led by City corporate partner Mauro Mattiuzzo, working closely with Centrica general counsel Nick Lumley. Centrica has historically worked with a variety of leading UK firms, including A&O, Ashurst, legacy Herbert Smith, Eversheds, Linklaters and Slaughter and May. 

AJ Lucas instructed City corporate boutique Peachey & Co partner Hubert Ashton.

The UK's moratorium on shale gas fracking – viewed by many as a key new source of energy – was lifted in December last year, after concerns were raised in 2011 when shale gas drilling near Blackpool prompted minor tremors.