Premier Oil announces plans to acquire UK North Sea assets from E.ON and temporary suspension of shares
Premier Oil announced it has agreed to acquire the whole of E.ON’s UK North Sea assets for a net consideration of $120 million plus working capital adjustments. The proposed acquisition, which will be funded from existing cash resources, adds immediate cash generative production, realises tax synergies on Premier’s current c.$3.5bn UK tax loss position and is accretive to lending covenants, the Company said Wednesday in a press release.
The assets being acquired are located in the Central North Sea, West of Shetlands and the Southern Gas Basin and add stable UK gas revenues to the portfolio rebalancing Premier’s commodity exposure.
Tony Durrant, Chief Executive, commented:
“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 $120 million, 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.
Premier has historically been able to capture long term value through acquisitions in low oil price environments. The material increase in low cost production and cash flow generation in 2016 and 2017, is materially covenant accretive and strengthens Premier’s financial position in the current environment.”
Premier will acquire interests in licences concentrated in the Central North Sea, West of Shetlands and the Southern Gas Basin.
Consideration for the acquisition is $120 million with an effective date of 1 January 2015 plus an agreed working capital adjustment. The entity to be acquired includes positive cash balances which will be retained by Premier. The effect of the adjustment to consideration may cause the transaction to be classified as a reverse takeover under the FCA Listing Rules and therefore the Company has requested the temporary suspension of trading in its Ordinary Shares.
The Acquisition requires approval from the Company’s shareholders, US Private Placement holders and banks. A shareholder circular and notice of meeting will be published in due course.