UK's Premier Divests Pakistan Fields

Debt-laden UK independent Premier Oil said April 5 it has agreed to sell its Pakistan business, comprising non-operated stakes in six gas-producing fields, for $65.6mn to Karachi-based Al-Haj Energy.

Premier said the transaction is in line with its stated strategy to dispose of non-core assets and that proceeds will be used to reduce its net debt – which at end-2016 was $2.8bn. It secured a debt refinancing deal in early February 2017 following almost a year of negotiations.

"We are pleased to have reached agreement to sell our Pakistan business. While now non-core for Premier, our Pakistan business has consistently outperformed our expectations over the years and this is testament to the hard work and skill of our team in Islamabad," said CEO Tony Durrant.

Premier's assets in Pakistan include six gas-producing fields (Map credit: Premier Oil)

Premier anticipates recording a book gain on disposal estimated at $40mn. The six Pakistan fields generated net profit after tax for Premier of $19.8mn in 2016. Al-Haj have paid a deposit to Premier of $15mn and will pay a further interim deposit of $10mn within the next 60 days, said Premier.

Premier has been present as a non-operator since 1988; two years later it discovered the Qadirpur field. Production from all six fields is sold on a dollar basis at the wellhead to the government-owned gas utilities, SSGCL and SNGPL. It initiated a formal sales process for the assets in 2015 after having received an unsolicited approach.

The six fields (and equity stakes) are: Qadirpur (4.75%), Bhit & Badhra (6%), Kadanwari (15.79%), Zamzama (9.375%) and Zarghun South (3.75%).

Mark Smedley