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BP sells two assets in North Sea oil fields for $625m

Tom Belger
Finance and policy reporter
Premier Oil plans to buy BP's Andrew Area and Shearwater assets in the North Sea. Photo: REUTERS/Andy Buchanan/pool

Premier Oil has announced plans to buy two oilfield assets from BP in the North Sea for $625m (£474m).

The oil company said on Tuesday it would snap up BP interests in five fields in the Andrew area, which is currently producing around 18,000 barrels of oil equivalent per day.

It said it would also buy BP’s interest in a significant production and infrastructure hub in Shearwater, adding 25 million barrels of oil equivalent in reserves.

A separate deal was announced for a stake in the Tolmount area from Dana for $191m, which Premier said would deliver its first gas by the end of the year.

Premier Oil shares (PMO.L) surged 13.2% in early trading in London on Tuesday after the announcement, while BP shares (BP.L) slid 0.4%.

Premier Oil shares soared after the announcement on 7 January. Chart: Yahoo Finance UK

The acquisitions will be funded by a $500m equity raise, which it said had been “fully underwritten” on a standby basis, as well as existing cash and a loan if necessary.

Permier Oil said it would seek shareholder approval for the purchases at a general meeting expected in the first quarter.

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Tony Durrant, chief executive of Premier Oil, said: "These acquisitions are materially value accretive for Premier and are in line with our stated strategy of acquiring cash generative assets in the UK North Sea.  

“We look forward to realising the significant long-term potential of the Andrew and Shearwater assets through production optimisation, incremental developments and field life extension projects. 

“We are also pleased to have consolidated our interest in the high return Tolmount development where we see material upside. The cash flow generated from the acquired assets will also accelerate the deleveraging of Premier's balance sheet."