Premier Oil exits Norway

Premier Oil Norwegian operation
Source: Premier Oil

On 16 November 2015, Premier Oil announced that it had agreed to sell its Norwegian business to Det Norske for USD120 million. The Norwegian business consists of the Premier Oil Norges subsidiary and includes the Vette development, adjacent Mackerel and Herring discoveries, a non-operated stake in Froy and seven exploration licences.

The transaction is expected to close before year end and proceeds will be used pay down debt. The exit of the business will give rise to a G&A saving of c.USD20 million p.a. as well as remove capital requirements for the Vette development that was progressing towards sanction.

For Premier Oil, the sale is in line with the company’s ongoing portfolio management strategy and is an important step to managing the high debt levels.

For Det Norske, the acquired business will bolster its Norwegian portfolio and Det Norske will be able to offset its production against the tax losses in Premier Oil Norges (from spend on Vette and Froy) which stood at USD146 million as at mid-2015. Det Norske will fund the acquisition from internal cash resources.

Tony Durrant, CEO of Premier Oil commented:

“We are pleased to have reached agreement to sell our Norwegian business to Det norske, one of our long term partners in Norway. Our team in Norway has done an excellent job in bringing the Vette project close to a sanction decision in a low oil price environment. The transaction will realise immediate value from the project as part of our strategy of active management of our portfolio.”

Karl Johnny Hersvik, CEO of Det Norske commented:

“Following the recent closing of the Svenska transaction, the acquisition of Premier is another bolt-on acquisition that further underlines our firm belief in and commitment to the Norwegian Continental Shelf.”