Premier Oil, UK based oil and gas explorer, has announced its entrance into a sale and purchase agreement to divest its entire interests in a number of licences for a cash consideration of $200 million.
The $200 million bid by Versus Petroleum SNS Limited for the sale of Licences PL089 and P534, will include Wytch Farm, a Dorset based on shore oil field currently in operation by Perenco UK.
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.
Premier Oil has a track record of releasing assets value at the appropriate stages of their life cycle through active portfolio management.
The Disposal of the licences 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.
Tony Durrant, Cheif 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.”
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%.