UK Premier sells Norwegian business for $120m
Premier has quit Norway, selling assets to Det norske oljeselskap in a cash deal worth $120m
The deal represents another step in Premier's previously-stated programme of portfolio management and will pay down the company's debt, it said. The transaction is subject to government approval and is expected to complete by year-end.
Premier's chief executive Tony Durrant said the team in Norway had done an "excellent job in bringing the Vette [formerly Bream] project close to a sanction decision in a low oil price environment. The transaction will realise immediate value from the project as part of our strategy of active management of our portfolio."
Other assets include the adjacent Mackerel and Herring discoveries (50%); a non-operated interest in the Froey field (50%); and seven exploration licences in the North Sea. Premier has 26 employees in Norway.
Analyst Malcolm Graham-Wood said in his daily note: "This deal seems rather neat to me as it pays down debt, gets out of Vette which was unlikely to be sanctioned anytime soon and leaves management able to concentrate on core geographies and projects."
At the end of 2015, Premier is estimated to hold tax losses carry forward, undepreciated tax balances and exploration tax refunds whose total value is about Nkr1bn ($115m). The transaction will be funded through existing cash and undrawn debt facilities.
DNO said the deal, which follows the closing of the Svenska transaction, was another 'bolt-on acquisition' that further underlined its commitment to the Norwegian Continental Shelf.
As of June 30, Premier's Norwegian operation had net assets of $146.3m, made up of gross assets of $189.9m and liabilities of $43.6m. For the year ended 31 December 2014 it made an operating loss of $17.4m.
Premier produced an average 57,500 barrels of oil equivalent/day (boe/d) over the first nine months of the year, ahead of its full-year guidance of 55,000 boe/d. In a nine month trading statement on 12 November, Durrant said: "Premier continues to benefit from stable production and valuable hedging contracts."
The Solan project in the UK North Sea has progressed well during good autumn weather and the field remains on track for first oil by year-end. The Catcher project, another UK North Sea project which it also operates, is also on schedule and on budget, he said. "Looking ahead, we see reduced capital expenditure and significant cost reductions for both our current and future projects to mitigate the current oil price environment."
Premier has been operating in Norway since 2005 and has sold stakes in the Grosbeak, Blaebaer and Luno II discoveries, resulting in combined proceeds of $33.5m.