German utility E.ON has signed an agreement to sell 100% of its shares in its UK E&P Subsidiaries to Premier Oil for $120m.
The oil and gas upstream portfolio in the UK consists of equity interests in 40 licences, including a 5.20% interest in the Elgin-Franklin field, 47% interest in the Babbage field as well as a 50% interest in the Tolmount discovery.
E.ON said the sale of its North Sea assets is the second and final step in the company’s review process of the exploration and production (E&P) business, which was placed under strategic review in November 2014.
The assets to be acquired by Premier are located in the Central North Sea, West of Shetlands and the Southern Gas Basin.
Following the acquisition, Premier will be able to increase its footprint in the Central North Sea.
E.ON chief financial officer Michael Sen said: "The successful sale of our E&P business in the UK represents the final step of the strategic review, with all E.ON E&P North Sea assets having now been divested.
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"The outcome demonstrates that E.ON E&P is a high-performing business with a strong asset base and superbly professional employees."
Premier plans to fund the proposed acquisition from existing cash resources.
Premier Oil chief executive Tony Durrant said: "Having recently completed the sale of our Norwegian assets for $120m, this transaction allows us to further consolidate our interests in the UK North Sea where any acquisitions are immediately value enhancing as a result of our existing UK tax position."
The transaction is subject to customary regulatory approvals and is slated for completion in the first half of 2016.
Image: The acquisition will enable Premier to increase its footprint in the Central North Sea. Photo: © Premier Oil.