Premier Oil PLC Solan Update (8663O)
June 02 2015 - 2:00AM
UK Regulatory
TIDMPMO
RNS Number : 8663O
Premier Oil PLC
02 June 2015
PREMIER OIL plc
("Premier" or "the Company")
Solan update
2 June 2015
Joint venture transactions
Premier is pleased to announce that it has concluded two
separate transactions in relation to its operated Solan project,
West of Shetland.
Premier has acquired Chyrsaor's 40 per cent interest in the
Solan field for nil upfront consideration. In return, Chrysaor will
receive the following contingent payments from a notional 40 per
cent interest in the field's net operating cash flow:
- A payment of up to $3 million a year which will be offset
against any subsequent royalty payments and net production interest
(NPI);
- Royalty payments totalling up to $100 million after allowing
for repayment to Premier of the notional outstanding loan of $530
million plus accrued interest;
- A NPI once Chyrsaor's notional 40 per cent equity interest
reaches a net positive position after allowing for the notional
repayment of the loan and accrued interest and after deducting
Chrysaor's notional 40 per cent share of total project capex, opex
and decommissioning costs.
As a result of this transaction, Premier will consolidate 100
per cent of the Solan field's production, revenues and capex in its
financial results. Premier currently estimates that the royalty
payments and the NPI would become payable at an average oil price
above $75/bbl and $100/bbl, respectively.
Separately, Premier has entered into a $100 million agreement
with FlowStream Commodities, subject to DECC approval. FlowStream
will make a $100 million upfront payment to Premier in return for
the proceeds from 15 per cent of Premier's production from the
Solan field for a period of time, the duration of which is
dependent on the Solan field's production levels and future oil
prices.
Project operational update
With improved weather, better progress has been made with the
commissioning work on the Solan facilities, West of Shetland. The
Victory flotel has now moved to a new location and will be replaced
by another flotel from early August. In the meantime, it is
anticipated that work will continue using a 'walk-to-work' vessel.
The Ocean Valiant rig is now on location with the drilling of the
second pair of producer-injector wells to commence imminently.
First oil is still targeted for the fourth quarter this year.
Tony Durrant, Chief Executive, commented:
"We are pleased to have concluded these new arrangements over a
key asset for Premier. The agreement with Chrysaor enables us to
focus on delivering first oil from the Solan project without
partner funding concerns, while the transaction with FlowStream
reduces our balance sheet exposure to the project and releases
capital to fund completion of the development. We continue to look
at further opportunities to realise value from the project."
Enquiries
Premier Oil plc 0207 730 1111
Tony Durrant
Richard Rose
Bell Pottinger 0203 772 2570
Gavin Davis
Henry Lerwill
This information is provided by RNS
The company news service from the London Stock Exchange
END
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