Premier Oil announces sale of Babbage Area interests

LONDON -- Premier is pleased to announce that it has entered into a sale and purchase agreement to sell its interests in the Babbage Area to Verus Petroleum SNS Ltd (Verus). The interests include a 47% interest in the Babbage gas field, a 50% interest in the Cobra discovery and certain outstanding exploration commitments.

The transaction value comprises £62.9 million ($88.1 million) in respect of the Babbage field interest. In addition, Verus will take on exploration commitments valued at £17 million ($23.8 million) resulting in net cash proceeds of £45.9 million ($64.3 million) to Premier, before customary working capital adjustments.  Further cash payments of up to £5.5 million ($7.7 million) are 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. The transaction is subject to pre-emption rights by joint venture partners.

The effective date of the transaction is Jan. 1, 2018. Disposal proceeds will be used to pay down Premier's existing debt.  Completion of the transaction is expected in 2018 2H.  Premier anticipates recording a book gain on disposal estimated at over $70 million.