Scotland business

Premier Oil buys E.On's UK North Sea assets

premier oil platform Image copyright Paul Talbot Photography

Premier Oil has agreed to buy all of German utility E.On's UK North Sea assets in a deal worth $120m (£83m).

The London-based exploration and production firm had suspended its shares on the stock exchange pending an announcement.

The assets it is buying are located in the Central North Sea, West of Shetlands and the Southern Gas Basin.

Premier said the acquisition would be funded from existing cash resources.

E.On's UK oil and gas upstream portfolio includes stakes in 40 licenses, including a 5.2% interest in the Elgin-Franklin field, a 47% interest in the Babbage field and a 50% stake in the Tolmount discovery.

The deal will add about 15,000 barrels of oil equivalent per day to Premier's production totals in 2016, according to the company.

'Significant synergies'

In a statement, Premier said the acquisition had the potential to "generate significant operating and cost synergies across the combined UK North Sea business".

Chief executive 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."

E.On's divestment of North Sea assets follows a strategic review of its business. It also follows the sale of its Norway exploration and production (E&P) business at the end of 2015.

The company's chief financial officer Michael Sen said: "This transaction further strengthens our financial profile and provides flexibility to implement our strategy and to reposition the group.

"The outcome demonstrates that E.On E&P is a high-performing business with a strong asset base and superbly professional employees.

"Premier has a long history in the UK and I am convinced that the company will continue to build on this success story in the future."

The transaction, which has to be cleared by regulators as well as Premier Oil shareholders and lenders, is expected to be closed in the first half of this year.

Related Topics

Related Internet links

The BBC is not responsible for the content of external Internet sites