Premier Oil has signed an agreement to acquire UK North Sea oil and gas assets from German utility E.ON for $120m.

Official

Under the terms of the agreement, Premier Oil will acquire assets located in the Central North Sea, West of Shetlands and the Southern Gas Basin.

The E.ON’s UK oil and gas upstream portfolio includes interests in 40 licenses, including a 5.20% interest in the Elgin-Franklin field, 47% in the Babbage field, 50% in the Tolmount discovery and 25% in Huntington field.

Premier Oil said that the acquisition could add cash generative production, and offer tax synergies on current $3.5bn UK tax loss position and accretive to lending covenants.

The acquisition is expected to add 15 kboepd of net production in 2016 to Premier and .64mmboe to Premier’s net reserves and contingent resources, at an implied cost of $1.9/boe, the company said.

Premier Oil CEO Tony Durrant said: "We are pleased to have agreed this value accretive deal as we continue to execute our strategy of focusing the portfolio on our core regions.

"Having recently completed the sale of our Norwegian assets for $120m, this transaction allows us to further consolidate our interests in the UK North Sea where any acquisitions are immediately value enhancing as a result of our existing UK tax position."

The divestment is a part of the E.ON´s review process of the Exploration & Production North Sea business. The deal follows completion of Norway E&P business sale in December 2015.

E.ON CFO Michael Sen said: "The successful sale of our E&P business in the UK represents the final step of the strategic review, with all E.ON E&P North Sea assets having now been divested.

E.ON said that the deal further strengthens its financial profile.

Subject to customary regulatory approvals as well as Premier Oil shareholder and lender approval, the transaction is scheduled to be closed in the first half of 2016.


Image: E.ON CFO Michael Sen. Photo: courtesy of E.ON SE.