Premier to buy E.ON’s UK upstream assets

UK Premier Oil has agreed to buy the whole of German utility E.ON's UK North Sea assets for a net consideration of $120mn cash, plus working capital adjustments, it said January 13. Last year it completed its sale of its Norwegian assets for a similar sum.

The assets being acquired are 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. Among others E.ON is a shareholder in the Elgin-Franklin assets, operated by French major Total.

CEO Tony Durrant said Premier was continuing to focus its portfolio on its core regions. Having recently completed the sale of 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,” he said. 

In a separate trading statement January 13 it said output in 2015 averaged 57,600 barrels of oil equivalent/day and guidance for this year is between 65,000 and 70,000 boe/d, including the proposed E.ON acquisition.

Elsewhere it said progress continues on Solan commissioning but first oil was now expected in February owing to weather conditions; and the Catcher project is also on schedule and on budget with encouraging development drilling results, it said.

Premier said it secured cost reductions of over a quarter in operating costs and general administration spending last year with further cuts forecast for 2016. It also reported significant liquidity with cash and undrawn bank facilities of $1.2bn.

CEO Tony Durrant said maximising production whilst cutting costs is critical; both were achieved in 2015 and will continue in 2016.

Shares in Premier were suspended earlier that day pending an announcement of a potential acquisition of assets by Premier which may be classified as a reverse takeover.