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Premier announces deal to sell SNS Babbage area interests for up to £63million

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Premier Oil has announced a deal to sell its assets in the Babbage Area in the southern North Sea to Verus Petroleum for  up to £62.9million.

The deal includes Premier’s 47% stake in the Babbage gas field and its 50% interest in the Cobra discovery.

In addition, Verus will take on exploration commitments worth £17million, resulting in net cash proceeds of £45.9million to Premier.

Premier says the deal will reduce debt and its exploration spend.

Further payment of up to £5.5million is due to Premier if the Cobra discovery in developed.

Premier says that even more payments could be made, dependent on future third party business across the Babbage infrastructure.

The sale has an effective transaction date of 1 January 2018.

Chief executive Tony Durrant said: “The sale of our interests in the Babbage Area will immediately reduce our net debt and our committed exploration spend in 2019.

“This transaction further demonstrates our determination to restore our balance sheet strength.

“It also adds to the value realised from the E.ON portfolio, which we acquired for $120 million in 2016 and has generated free cash flow and proceeds from announced disposals of around $300 million to date.”

 

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