Premier Oil has signed a sale and purchase agreement to buy BP’s Andrew Area and its Shearwater assets in a deal worth up to $565 million.
The North Sea producers had last month renegotiated the terms of the sale after the price of oil plunged as Covid-19 reduced demand.
Premier Oil had originally agreed to a $625 million package but will now pay $210 million up front plus up to $115 million depending on future oil and gas prices and foot $240 million of the abandonment bill for Andrew. BP will pay the full cost of the Shearwater abandonment.
To get the deal through, Premier also had to settle a legal dispute with one of its creditors which was opposed to the purchase. It intends to raise the $210 million through an equity fundraise and aims to have the deal completed by the end of September.
The Andrew assets 140 miles north-east of Aberdeen comprise the Andrew (62.75%), Arundel (100%), Cyrus (100%), Farragon (50%) and Kinnoull (77.06%) fields. BP holds a 27.5% stake in the nearby Shell-operated Shearwater field.
Premier said the new assets would be “immediately cash generative and will accelerate the use of Premier’s $4.1 billion of UK tax losses”, helping the company to reduce its debts.
Chief executive Tony Durrant said: “The signing of the SPAs with BP is another important milestone in completing the value-accretive BP Acquisitions which consolidates the Group’s position in the UK North Sea, one of our core areas, while, at the same time, accelerates the deleveraging of our balance sheet.”