Premier To Divest Wytch Farm for $200mn

UK independent Premier Oil said September 12 it has agreed to divest its interests in the onshore Wytch Farm oilfield in southern England to Aberdeen-based junior indie Verus Petroleum for $200mn cash. It first mentioned the possible sale a month ago, but without naming the buyer.

In addition, Premier will be able to release letters of credit totalling $75mn issued in relation to future decommissioning liabilities; these are now being transferred to Verus. The effective date of the disposal is July 1, 2017.

Premier's board said it believes that the disposal "represents an excellent opportunity to realise an attractive valuation, well in excess of the implied valuation from the most recent transaction in Wytch Farm," and that it would generate proceeds to pay off debt. 

Among other projects, Premier is looking to take a final investment decision in 1H 2018 on phase 1 of the 1 trillion ft³ Tolmount gas development in the southern UK North Sea, which it operates with a 50% equity interest, and for which it will have to provide $100mn as its share of capital investment.

Premier is divesting its 33.8% stake in the PL089 and P534 licences that make up Wytch Farm. Premier CEO Tony Durrant said: "The disposal will allow for a significant reduction in Premier's net debt and generates material value for shareholders."

 Mark Smedley