Premier Oil has agreed to sell its Norwegian business to Det norske oljeselskap in a deal worth $120m.

The company’s Norwegian business Ponas consists of the Vette development and adjacent Mackerel and Herring discoveries (50% interest), as well as a non-operated interest in the Frøy field (50% interest) and seven exploration licences in the North Sea.

Premier Oil will use the proceeds to pay down its debt.

Premier Oil chief executive Tony Durrant said: "We are pleased to have reached agreement to sell our Norwegian business to Det norske, one of our long-term partners in Norway.

"The transaction will realise immediate value from the project as part of our strategy of active management of our portfolio."

"The transaction will realise immediate value from the project as part of our strategy of active management of our portfolio."

Ponas reported net assets of $146.3m as of 30 June 2015 and generated an operating loss of $17.4m for the year ended 31 December 2014.

Operating in Norway since 2005, Premier realised value by selling the Grosbeak, Blåbaer and Luno II discoveries, which have generated total proceeds of $33.5m.

Subject to the receipt of government approval, the transaction is slated for completion by the end of this year.

Det norske will fund the transaction using its existing cash and undrawn debt facilities.

Det norske CEO Karl Johnny Hersvik said: "Following the recent closing of the Svenska transaction, the acquisition of Premier is another bolt-on acquisition that further underlines our firm belief in and commitment to the Norwegian Continental Shelf."

Det norske completed the acquisition of Svenska Petroleum for $75m.