Premier Oil snaps up E.On's North Sea assets

Jessica Morris
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The assets are located in the Central North Sea, West of Shetlands and the Southern Gas Basin (Source: Getty)

Premier Oil today announced it's agreed to acquire E.On's North Sea assets for $120m (£83m) plus working capital adjustments.

Premier said the deal would add "significant" production and cashflow in 2016 and 2017, even at current oil and gas prices.

It will add around 15,000 barrels of oil equivalent per day to the company's production and give it access to a hedging position worth around $80m.

The assets in question are located in the Central North Sea, West of Shetlands and the Southern Gas Basin.

It could be one of the first of what analysts expect to be an uptick in consolidation activity in the wake of low oil prices, with US WTI recently falling to a historic low of below $30 per barrel.

So far, this has ranged from the mega-deal between Royal Dutch Shell and BG, to smaller companies such as Ophir Energy which said it's received informal merger and takeover interest from several parties.

Read more: Premier Oil shares have been suspended

Tony Durrant, chief executive of Premier Oil, said: "We are pleased to have agreed this value accretive deal as we continue to execute our strategy of focusing the portfolio on our core regions."

"This transaction allows us to further consolidate our interests in the UK North Sea where any acquisitions are immediately value enhancing as a result of our existing UK tax position."

Premier's shares were suspended this morning ahead of a a potential acquisition which it said could be classified as a reverse takeover, typically meaning the target has a larger market value than the bidder.

Premier completed the sale of its Norwegian business for $120 million to Det norske oljeselskap just three weeks ago.

For E.On, the deal follows the sale in October of the bulk of its North Sea oil and gas assets in Norway for $1.6bn to Russian billionaire Mikhail Fridman.

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