By Selina Williams 

LONDON--U.K. utility Centrica PLC said Thursday it would shrink its oil and gas exploration and production business, exit wind ventures, slash costs and cut thousands of jobs in an effort to return the company back to its core energy supply business.

The move comes as the company's oil and natural gas division has been under pressure from the sharp decline in oil prices, which are around half of what they were in the first half of last year, pulling down profits in its U.K. and North American energy supply business.

Centrica said it would cut back its exploration and production arm, which includes oil and gas fields in the U.K. North Sea, offshore Norway and in Canada, to 40 million to 50 million barrels of oil equivalent a year from around 75 million barrels of oil equivalent a year.

Centrica aims to release GBP0.5 million to GBP1 billion ($780 million to $1.56 billion) of proceeds by 2017 from the sale of oil and gas assets and the wind business, it said.

Chief Executive Iain Conn, who came to Centrica from BP PLC where he was head of the oil giant's refining and marketing division, said that the strategic review of the company that was launched at the beginning of the year concluded that the U.K.'s biggest energy supplier needed to return to its core business.

"Our purpose is to provide energy and services to satisfy the changing needs of our customers, and as such we will focus our growth ambitions on our customer-facing activities," said Mr. Conn, who took the helm at Centrica at the beginning of the year.

Centrica said head count would be cut by a net 4,000 as overall head count would be reduced by 6,000 across the company, but 2,000 new jobs would be created. Centrica said it was targeting cost efficiencies of GBP750 million over five years.

The results of the review came as the company reported a 3% fall in underlying earnings as the impact of lower oil and natural gas prices on its exploration and production business undermined increased profits at its retail supply arm.

Profits rose at the company's residential supply business in the U.K.--British Gas--and its North America business Direct Energy, as colder-than-normal winter weather resulted in higher-than-expected energy consumption.

Group adjusted operating profit, or earnings before interest and tax and excluding exceptional items such as disposals and impairments, fell 3% to GBP1 billion in the first half of 2015 from GBP1.03 billion a year earlier.

Revenue was down 2% at GBP15.45 billion, compared with GBP15.7 billion a year earlier.

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