Premier Oil has completed the previously announced sale of its stake in Babbage Area in the UK North Sea to Verus.
Premier said on Friday it had received £30.3 million ($38.7 million), after adjustments for Babbage cash flows collected by Premier since the effective date of 1 January 2018.
“The sale proceeds will be used to pay down the Company’s existing debt,” Premier said.
According to the terms of the deal, originally announced on April 30, 2018, Verus will get a 47 percent share in the Babbage gas field, a 50 percent share in the Cobra discovery and certain outstanding exploration commitments.
The Babbage gas field is located in Block 48/2a in the UK Southern Gas Basin. Premier acquired its interest in the Babbage gas field as a result of its acquisition of E.ON’s UK North Sea assets in 2016. The Babbage gas field consists of a 9 slot minimum facilities platform with horizontal multi-fracced wells.
Gas is exported to West Sole and on to Dimlington Gas Terminal. The platform was initially manned to support well drilling, fraccing, and clean-up operations but moved to PAI (Not Permanently Attended Installation) on 5 April. According to information available on Premier Oil’s website, the field is currently producing above 3 kboepd (net) to Premier.
Premier Oil said in April the transaction value comprised $88.1 million in respect of the Babbage field interest. In addition, Verus will take on exploration commitments valued at $23.8 million resulting in net cash proceeds of around $64.3 million to Premier, before customary working capital adjustments.
Premier said further cash payments of up to $7.7 million would be due to Premier if the Cobra discovery is developed.
Additional potential payments would also be due dependent upon future specific third-party business across the Babbage infrastructure.
Production from Babbage has averaged 2.5 kboepd year to date, Premier said on Friday.
Offshore Energy Today Staff