30 Apr 2018 07:00
PREMIER OIL PLC
("Premier")
Sale of Babbage Area interests
30 April 2018
Premier is pleased to announce that it has entered into a sale and purchase agreement to sell its interests in the Babbage Area to Verus Petroleum SNS Ltd (Verus). The interests include a 47 per cent interest in the Babbage gas field, a 50 per cent interest in the Cobra discovery and certain outstanding exploration commitments.
The transaction value comprises £62.9 million ($88.1 million) in respect of the Babbage field interest. In addition, Verus will take on exploration commitments valued at £17 million ($23.8 million) resulting in net cash proceeds of £45.9 million ($64.3 million) to Premier, before customary working capital adjustments. Further cash payments of up to £5.5 million ($7.7 million) are due to Premier if the Cobra discovery is developed. Additional potential payments would also be due dependent upon future specific third party business across the Babbage infrastructure. The transaction is subject to pre-emption rights by joint venture partners.
The effective date of the transaction is 1 January 2018. Disposal proceeds will be used to pay down Premier's existing debt. Completion of the transaction is expected in 2018 2H. Premier anticipates recording a book gain on disposal estimated at over $70 million.
Tony Durrant, Chief Executive, commented:
"The sale of our interests in the Babbage Area will immediately reduce our net debt and our committed exploration spend in 2019. This transaction further demonstrates our determination to restore our balance sheet strength. It also adds to the value realised from the E.ON portfolio, which we acquired for $120 million in 2016 and has generated free cash flow and proceeds from announced disposals of around $300 million to date."
Enquiries |
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Premier Oil plc | Tel: 020 7730 1111 |
Tony Durrant, Chief Executive |
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Richard Rose, Finance Director |
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Camarco | Tel: 020 3757 4980 |
Billy Clegg Georgia Edmonds |
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Notes to editors
Premier's interests in the Babbage Area include a 47 per cent operated stake in P456, which contains the Babbage gas field, and a 50 per cent operated stake in P2212 and P2301, which contain the Cobra discovery. The Babbage field has generated net production for Premier of 2.9 kboepd in Q1 2018.
For the 12 months ended 31 December 2017, the Babbage Area assets generated profit before taxation of approximately $19.3 million (Premier net share). Gross assets at 31 December 2017 were $18.5 million.
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.