Premier Oil completes deal to buy BP North Sea assets in $565 million deal

Premier Oil has signed a sale and purchase agreement to buy BP's Andrew Area and its Shearwater assets in a deal worth up to $565 million.

The North Sea producers had last month renegotiated the terms of the sale after the price of oil plunged as Covid-19 reduced demand.

Premier Oil had originally agreed to a $625 million package but will now pay $210 million up front plus up to $115 million depending on future oil and gas prices and foot $240 million of the abandonment bill for Andrew. BP will pay the full cost of the Shearwater abandonment.

To get the deal through, Premier also had to settle a legal dispute with one of its creditors which was opposed to the purchase. It intends to raise the $210 million through an equity fundraise and aims to have the deal completed by the end of September.

The Andrew assets 140 miles north-east of Aberdeen comprise the Andrew (62.75%), Arundel (100%), Cyrus (100%), Farragon (50%) and Kinnoull (77.06%) fields. BP holds a 27.5% stake in the nearby Shell-operated Shearwater field.

Premier said the new assets would be "immediately cash generative and will accelerate the use of Premier's $4.1 billion of UK tax losses", helping the company to reduce its debts.

Chief executive Tony Durrant said: "The signing of the SPAs with BP is another important milestone in completing the value-accretive BP Acquisitions which consolidates the Group's position in the UK North Sea, one of our core areas, while, at the same time, accelerates the deleveraging of our balance sheet."

Source: Insider

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