Premier Oil confirms the sale of its stake in Britain's largest onshore oilfield

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Wytch Farm is the largest onshore oilfield in the UK (Source: Getty)

Premier Oil has confirmed the sale of its nearly 34 per cent stake in the Wytch Farm oilfield to Verus Petroleum for $200m (£151m).

Under the deal, Premier will also be able to release letters of credit totaling around $75m which have been issued in relation to future decommissioning liabilities.

The sale of its stake in the Dorset oilfield, which is the largest onshore oilfield in western Europe, will help Premier pay down its existing debt.

Read more: Ramped up production allows Premier Oil to pay down debt and lift forecasts

Wytch Farm has been producing since 1979, but it has fewer near-term growth prospects than elsewhere in Premier's portfolio, the company said.

"The disposal will allow for a significant reduction in Premier's net debt and generates material value for shareholders," said Tony Durrant, chief executive of Premier.

"This is the latest in a series of disposals in line with Premier's strategy of realising value for shareholders at the appropriate stage of an asset's life cycle and at an attractive valuation."

Premier had been building up its stake in Wytch Farm since 1984, when it bought a 12.4 per cent interest. In 2011, the firm bought an additional 17.7 per cent stake, and in July this year it acquired a further 3.7 per cent, taking its total interest to 33.8 per cent.

As of the end of 2016, the estimated 2P reserves in Wytch Farm net to Premier were 14.9m barrels of oil equivalent. Wytch Farm production net to Premier averaged 5.1 barrels of oil equivalent per day for the first half of 2017.

Shares in Premier Oil were up 2.82 per cent at 59.25p in morning trading.

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Tags: Premier Oil