Premier Oil share price rises after shareholders give green light to E.On deal

 
Jessica Morris
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(FILES) File Photo taken in the North Se
Premier Oil previously said the deal would add "significant" production and cashflow in 2016 and 2017 (Source: Getty)

Premier Oil shareholders have given the green light to its acquisition of E.On's North Sea oil and gas fields for $120m (£83m).

The London-listed company said today that 99.9 per cent of shareholders who voted were in favour of the tie-up. Premier will now snap up assets located in the central North Sea, west of Shetlands and the southern Gas Basin.

Its shares rose 2.6 per cent to 71.55p per share in early afternoon trading.

Read more: Premier oil cancels contract in the Falklands

The price of oil has fallen from over $110 in the middle of 2014 to around $40 today — piling pressure onto producers in the ageing oil and gas basis. Premier's shares have shed around 80 per cent during this period taking its market cap to £354.31m.

Premier previously said the deal would lead to "significant" production and cashflow increases this year and in 2017. It will also add around 15,000 barrels of oil per day to the company's production, while giving it access to a hedging position worth around $80m.

Premier stocks surged more than 100 per cent after the lifting of a share suspension that had coincided with the deal's announcement.

Read more: Shell could sell some North Sea assets

The company scrapped its dividend and reduced investments after making a loss of $210.3m last year. The firm also warned that it could be forced to renegotiate debt repayments if low oil prices persist.

Premier recently bought on Rothschild to lead negotiations with banks, in preparation for the possibility that it may breach its financial covenants.

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