Exploratory firm Premier Oil has dropped plans to buy a 25 per cent stake in Korean-owned company Dana Petroleum’s Tolmount field in the North Sea.
The $191m (£152.6m) deal was agreed in January, alongside agreements to buy two fields from BP for a combined $625m.
However, the company today revealed that it had shelved the plan to buy the gas field, which it already owns a 50 per cent stake in, but did not comment on the reasons why.
The field is currently under development and is expected to produce its first gas by the end of the year.
Like oil prices, the value of gas has plunged this year in line with the fall in global demand due to the coronavirus.
Premier also announced that its creditors had approved its acquisition of the BP fields after the oil giant agreed to reduce the prices for the Andrew Area and Shearwater deposits.
Under the amended terms cash payable upon completion has been reduced from the original price to $210m.
Standard and Poor said the original sum will be offset by BP keeping $300m of interim cash flows, while another $115m would only be payable upon higher future oil and gas prices.
Analysts at the rating agency said that although the assets came at a “considerable cost”, they were “materially value accretive to Premier and are in line with the company’s stated strategy of acquiring cash generative assets in the UK North Sea”.
The acquisition plan had faced opposition from some of the firm’s shareholders, including hedge fund ARCM, which lost a court challenge over Premier’s loan refinancing proposal.
Last month chief executive Tony Durrant said Premier was on course to be cash flow neutral due to its oil hedging programme, despite the slump in oil prices.
Under the initiative, 30 per cent of the firm’s production this year is protected at a price of $60, with 50 per cent of all second quarter production hedged at $64.
Premier’s shares slipped slightly on the back of this morning’s announcement, falling 0.4 per cent.