Tuesday 7 January 2020 9:08 am

Premier Oil shares soar as it pays $625m for BP North Sea assets

Shares in Premier Oil soared in early trading after the UK oil company announced it will buy two major North Sea assets from BP for $625m (£473.8m). 

The oil and gas firm is planning to buy the Andrew Area and Shearwater assets from competitor BP, as well as an extra 25 per cent interest in the Premier-operated Tolmount Area from Dana for $191m. 

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Premier Oil, which today reported that 2019 production was at the upper end of full-year guidance at 78,400 barrels of oil per day, said the acquisitions will add the cash equivalent of an extra 23,000 barrels of oil per day in production. 

Investors welcomed the news and sent shares up 13.2 per cent to 114.9p.

The proposed acquisitions are expected to be funded through a $500m equity raise, existing cash and a loan of $300m if needed.

“Premier expects that the equity raise will include both a placing and rights issue component with any shares issued under the placing qualifying for the subsequent pre-emptive rights issue,” it said.

Shareholders will vote on the proposed deal at a general meeting to be held in the first quarter of this year. 

Chief executive Tony Durrant said: “These acquisitions are materially value accretive for Premier and are in line with our stated strategy of acquiring cash generative assets in the UK North Sea.

“We look forward to realising the significant long-term potential of the Andrew and Shearwater assets through production optimisation, incremental developments and field life extension projects.

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“We are also pleased to have consolidated our interest in the high return Tolmount development where we see material upside. 

“The cash flow generated from the acquired assets will also accelerate the deleveraging of Premier’s balance sheet.”