Premier announce April 30 that it has entered into a sale and purchase agreement to sell its interests in the Babbage Area to Verus Petroleum SNS Ltd.
The interests include a 47% interest in the Babbage gas field, a 50% interest in the Cobra discovery and certain outstanding exploration commitments.
"The sale of our interests in the Babbage Area will immediately reduce our net debt and our committed exploration spend in 2019,” said CEO Tony Durrant. “This transaction further demonstrates our determination to restore our balance sheet strength. It also adds to the value realized from the E.ON portfolio, which we acquired for $120 million in 2016 and has generated free cash flow and proceeds from announced disposals of around $300 million to date."
The transaction value comprises $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 $64.3 million to Premier, before customary working capital adjustments. Further cash payments of up to $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 January 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.
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