Premier Oil to buy E.ON's UK North Sea Assets

Posted by Joseph Keefe January 13, 2016

Transaction valued at up to 150 mln euros; deal comes weeks after Premier sold Norwegian business.

UK-listed mid-sized oil producer Premier Oil (PMOIF) is buying German utility E.ON's oil and gas assets in the British part of the North Sea, three banking and industry sources told Reuters on Wednesday.

The sources did not disclose the exact size of the transaction but said it was in the area of up to 150 million euros ($162.3 million). Premier shares were suspended earlier on Wednesday pending an acquisition announcement.

Premier Oil and E.ON declined to comment.

The deal plays into expectations for an increase in mergers in the oil and gas sector this year as companies with weakened balance sheets look to sell assets and stronger players hunt for bargains, with oil prices close to 12-year lows.

For Premier Oil, growing its UK North Sea portfolio comes just weeks after it completed the sale of its Norwegian business for $120 million to Det norske oljeselskap.

If the deal goes through, Premier would expand its presence in the central and southern North Sea, including the Huntington oil field of which it already owns 40 percent.

E.ON put its North Sea oil and gas exploration and production (E&P) business under review in late 2014 when it announced plans to spin off its energy trading, conventional generation and E&P into a separate unit called Uniper.

In October, it sold the bulk of its North Sea oil and gas assets in Norway for $1.6 billion to Russian billionaire Mikhail Fridman. At the time, analysts expected E.ON's British oil and gas assets to fetch about 300-400 million euros, but oil prices have fallen further since.

Premier Oil requested its shares be suspended as an acquisition it is due to announce could be classified as a reverse takeover, a stock exchange statement said, which typically means the target is larger in value than the bidder.

Premier Oil is valued at 97 million pounds ($139.9 million).

E.ON says it holds 30 licences in Britain and operates about a third of them. Britain accounted for 7 percent of E.ON's oil and gas production in 2014.

Germany's biggest utility originally intended to make all of its E&P business part of Uniper, the unit it plans to spin off and list separately later this year.