Premier Oil has recently announced it will be acquiring all of the oil and gasfields owned by Eon. The deal which is worth $120 could potentially spur other acquisitions within the industry.
The UK-listed company announced on Wednesday that it had agreed to take over the Huntington field as well as Eon’s interests in a range of other areas across the UK North Sea.
The deal provides a glimmer of hope for the battered British oil industry, which is suffering the effects of the slumping oil price. The price of a barrel of Brent crude oil fell further on Wednesday to about $30, having been at $115 as recently as summer 2014.
Tony Durrant, Premier’s chief executive, said: “We have been looking at these assets for several years, but have been negotiating the price down as commodity prices fell.”
For the company, it means additional cash flow from production, which will not be taxed because of tax losses incurred with its 2009 purchase of Oilexco in 2009. Premier will pay for the fields from cash, financed from the sale of its Norwegian oilfields, also for $120m.
The recent collapse in Premier’s share price — which has fallen 86 per cent in the past year, giving the company a market value of about £100m — means the deal could end up being worth more than the company itself. This could see it being classified as a reverse takeover, and Premier’s shares have been suspended while the UK Listings Authority consults on that issue.
Source: The Financial Times