Premier Oil PLC Proposed Sale of Wytch Farm Interests (4648Q)
September 12 2017 - 1:09AM
UK Regulatory
TIDMPMO
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 14.9(1) mmboe. Wytch Farm production, net to
Premier's working interest, averaged 5.1(1) boepd for the first
half of 2017.
For the 12 months ended 31 December 2016, Wytch Farm generated
profit before taxation of approximately $23.4(2) million and as at
30 June 2017 had gross assets of approximately $90.2(2)
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
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