Premier: West Africa deal
May 28 2003 - 2:00AM
UK Regulatory
RNS Number:5914L
Premier Oil PLC
28 May 2003
PREMIER OIL PLC
("Premier")
Premier Buys into West African Assets
Premier is pleased to announce that it has reached agreement with Fusion Oil &
Gas plc (Fusion) to purchase a number of West African interests including the
Chinguetti and Banda oil discoveries offshore Mauritania.
In Mauritania, Premier will acquire Fusion's 6% interest in PSC B (containing
the Chinguetti discovery) and 3% interest in PSC A (containing the Banda
discovery) for a cash consideration of $10 million and an overriding royalty.
The overriding royalty is payable out of production revenues from all
developments on these PSC's and is a production related payment on a sliding
scale varying with oil prices. For Chinguetti, the value of the royalty is
estimated at $5 million (net present value at 10% p.a.), or $8 million
(undiscounted), at a constant real oil price of $20 per barrel. In addition,
Premier will, on approval of a development plan, pay a $2 million bonus to
Fusion for each new discovery resulting in a 50 mmbbl development on PSC B
(excluding the existing discovery at Chinguetti) and a $1 million bonus for each
new discovery resulting in a 50 mmbbl development on PSC A (excluding the
existing discovery at Banda).
The Chinguetti discovery is expected to receive development consent in the next
12 months and production of the estimated 120 mmbbls of oil reserves (Premier
share 7.2 mmbbls) is planned to commence in 2005/6. A multi-well drilling
programme covering both PSC A and PSC B is expected to begin by late 2003. There
are many other attractive exploration prospects to be pursued in both PSC's.
In Gabon, Premier will acquire an 18% interest in the Iris Marin and Themis
Marin offshore PSC's in return for funding its own costs and a further 18% of
costs on Fusion's behalf through to the completion of the second well on each
PSC. These shallow water PSC's have multiple Gamba formation pre-salt targets of
approximately 20-40 mmbbls and are on trend with Premier's existing Dussafu
(formerly Phenix) block.
In Saharawi Arab Democratic Republic (SADR), Premier will acquire 35% of
Fusion's rights under a Technical Cooperation Agreement with the government of
the SADR in return for the funding of 35% of costs incurred up to any future
licence award. In each licence in which it chooses to participate (to a maximum
of three), Premier will fund 70% of the initial exploration costs capped at $3
million and 35% thereafter. The area is virtually unexplored as it is currently
under a dispute over sovereignty.
As part of this transaction, Premier has granted Fusion the right to receive a
5% interest from Premier's 100% interest in Block 2 (the Sinapa block) and in
Blocks 4A and 5A (the Esperanca blocks) in Guinea Bissau, these rights to be
exercised within 60 days of completion of the drilling of the next well on each
block.
The agreements are subject to routine government and partner approvals.
Charles Jamieson, CEO of Premier Oil, said:
"This exciting deal with Fusion is a significant advance towards our goal of
building a business in West Africa. In Mauritania we look forward to the early
development of the Chinguetti and Banda discoveries and the significant
exploration potential of these blocks.
The addition of two more interests in Gabon to our current Dussafu (Phenix)
block increases our exposure to the highly prospective shallow water pre-salt
play.
This deal is an excellent example of Premier's strategy of exposing shareholders
to significant added value and upside through commercial dealmaking."
28 May 2003
ENQUIRIES:
Premier Oil plc Tel: 020 7730 1111
Charles Jamieson
John van der Welle
College Hill Tel: 020 7457 2020
James Henderson
Background For Editors:
Premier Oil plc is a leading independent oil and gas company with producing
interests in the UK, Indonesia, and Pakistan. Exploration is ongoing in the UK,
Indonesia, West Africa (Guinea Bissau and Gabon) and South Asia (Pakistan and
India).
On 16 September 2002 Premier announced a major restructuring involving the
transfer of interests in Myanmar and Indonesia to its major shareholders Amerada
Hess and Petronas in return for the cancellation of their combined 50 per cent.
shareholding in Premier, an injection of cash and repayment of Myanmar project
debt. The restructuring leaves Premier as a fully independent oil company in a
good position to follow its strategy of value creation and early realisation
through oil and gas exploration and commercial deal-making.
The partners and interests in the Mauritanian PSC's on completion of this deal
will be:
PSC A PSC B
Woodside (Operator) 35.0% 35.0%
ENI 35.0% 35.0%
Hardman 24.3% 21.6%
Roc Oil 2.7% 2.4%
Premier 3.0% 6.0%
The Government of Mauritania has the right to back in to 12% equity in
developments producing up to 75,000 barrels of oil per day.
The partners and interests in the Gabon licences on completion of this deal will
be:
Iris Marin Themis Marin
Fusion (Operator) 20.57% 20.57%
Premier 18% 18%
Sunburnt Down PC 25.71% 25.71%
Hardman 12.86% 12.86%
Petro SA 22.86% 22.86%
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCARMPTMMJTBBJ