Information  X 
Enter a valid email address

Premier Oil PLC (PMO)

  Print      Mail a friend       Annual reports

Tuesday 12 September, 2017

Premier Oil PLC

Proposed Sale of Wytch Farm Interests

RNS Number : 4648Q
Premier Oil PLC
12 September 2017
 

 

PREMIER OIL PLC 

("Premier")

Proposed Sale of Wytch Farm Interests

  12 September 2017

 

Premier is pleased to announce that it has entered into a sale and purchase agreement to sell its entire interests in Licences PL089 and P534, which contain the Wytch Farm field ("Wytch Farm"), to Verus Petroleum SNS Limited ("Verus") for a cash consideration of $200 million (subject to certain customary financial adjustments) payable on completion (the "Disposal"). In addition, Premier will be able to release Letters of Credit totalling approximately $75 million which have been issued in relation to future decommissioning liabilities that are now being transferred to Verus. The effective date of the Disposal is 1 July 2017.

 

Wytch Farm is an onshore oil field located in Dorset, United Kingdom that has been producing since 1979. Verus is a UK-focused independent E&P company backed by HitecVision, a Norway based private equity investor focused on the upstream offshore oil and gas industry.

 

Background to and reasons for the Disposal

 

Premier has a track record of realising value at the appropriate stage of an asset's life-cycle through active portfolio management. The Board believes that the Disposal now is in the best long-term interest of Premier and its stakeholders. It represents an excellent opportunity to realise an attractive valuation well in excess of the implied valuation from the most recent transaction in Wytch Farm.

 

The Disposal will generate proceeds to accelerate deleveraging of the balance sheet. Wytch Farm is non-operated, onshore and with fewer near-term growth prospects than elsewhere in Premier's portfolio.

 

Information regarding Wytch Farm

 

Wytch Farm is a large onshore oil field although a significant area extends offshore. The field has been developed with 11 well sites linked to a central onshore gathering station and is operated by Perenco UK Limited. Production is exported via pipeline to the Hamble terminal near Southampton for tanker loading.

 

Premier acquired a 12.4% interest in the Wytch Farm field in 1984. In December 2011, Premier completed the acquisition of an additional 17.7% interest from Perenco UK Limited and in July 2017 announced an agreement to acquire a further 3.7% from Maersk Oil North Sea UK Ltd, taking its total interest to 33.8%. 

 

As of 31 December 2016, the estimated 2P reserves in Wytch Farm net to Premier were 14.91 mmboe. Wytch Farm production, net to Premier's working interest, averaged 5.11 boepd for the first half of 2017.

 

For the 12 months ended 31 December 2016, Wytch Farm generated profit before taxation of approximately $23.42 million and as at 30 June 2017 had gross assets of approximately $90.22 million.

 

Use of proceeds

 

Disposal proceeds will be used to pay down Premier's existing debt. In addition, Verus will assume all of the abandonment liabilities and associated decommissioning security. Premier will therefore be released from letters of credit, amounting to approximately $75 million, currently held for future field abandonment liabilities. Together, this will result in a reduction to Premier's covenant net debt of approximately $275 million, taking into account cash flows retained post the effective date.

 

Approvals and consents

 

Premier's lenders have provided the necessary approvals and consents required in connection with the Disposal. The transaction is subject to the pre-emption rights of existing joint venture partners, a process which will commence imminently.

 

The Disposal is classified as a Class 1 transaction as defined by Chapter 10 of the UKLA Listing Rules. As such, the Disposal is conditional upon shareholder approval. In addition, the Disposal is conditional upon satisfaction of certain customary conditions including government and third party approvals. Subject to fulfilling these conditions, it is expected to complete by the end of December.

 

Further details of the Disposal and a notice to convene a general meeting will be sent to Premier's shareholders in due course.

 

Tony Durrant, Chief Executive, commented:

 

"The Disposal will allow for a significant reduction in Premier's net debt and generates material value for shareholders. This is the latest in a series of disposals in line with Premier's strategy of realising value for shareholders at the appropriate stage of an asset's life cycle and at an attractive valuation."

 

 

Enquiries

 

Premier Oil plc

Tel: 020 7730 1111

Tony Durrant, Chief Executive

 

Richard Rose, Finance Director

 


 

 

 

 

This announcement may contain certain forward-looking statements and information that both represents management's current expectations or beliefs concerning future events and are subject to known and unknown risks and uncertainties.  These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future.  There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts.  Nothing in this announcement should be construed as a profit forecast.  Past share performance cannot be relied on as a guide to future performance.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCOKBDKABKKOCD

a d v e r t i s e m e n t