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Premier Oil strikes deal to take full control of Shetlands project

Reuters - UK Focus

LONDON, June 2 (Reuters) - Oil producer Premier Oil (LSE: PMO.L - news) has struck a deal to take full ownership of its Solan oil project west of Shetlands in the North Sea, taking over a 40 percent stake from project partner Chrysaor.

The transaction on the project, set to produce first oil in the fourth quarter, entitles Chrysaor to payments that will first be offset against a $530 million loan relating to capital expenditure investments made in the field, Premier Oil said.

Separately, Premier Oil also agreed a $100 million contract with FlowStream Commodities for the proceeds from 15 percent of oil production from Solan for a period of time dependent on oil prices and production levels.

"This will somewhat boost Premier (NasdaqGS: PINC - news) 's balance sheet and this opens the door for a farm out of Solan post first oil," said analysts at First Energy.

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The deal is one of a handful of small-scale transactions made in the North Sea this year, raising hopes for sellers to attract buyers to the mature market.

"We continue to look at further opportunities to realise value from the project," said Premier Oil Chief Executive Tony Durrant. (Reporting by Karolin Schaps; Editing by Mark Potter)