Premier Oil to sell 30% stake in North Sea pipeline

Premier Oil has agreed to sell its 30% stake in the Esmond Transportation System pipeline in the North Sea to Cats Management for up to £23.6m.

The consideration consists of an initial upfront payment of £21m on completion, plus a future potential payment of up to £2.6m linked to the achievement of certain key milestones in respect of any future development of the Pegasus field.

Premier said proceeds from the disposal will be used to pay down its existing debt.

The ETS pipeline was built to transport gas from Esmond Area fields to the Bacton gas terminal on the North Sea Coast in North Norfolk. It is currently operated by Perenco UK Limited as operator of the Trent and Tyne fields, and is used as the export route for the Cygnus gas field recently brought on stream by ENGIE.

The effective date of the sale is 1 January 2017, with completion expected in the first half of next year, subject to obtaining all normal and necessary third party consents and regulatory approvals including discharges and release of securities.

Chief executive Tony Durrant said: "The sale of the ETS pipeline interest is another step in realising value from the E.ON UK portfolio acquired by Premier for $120m in 2016. The ETS pipeline does not serve any fields owned by Premier and is therefore non-core to the group."

At 0930 GMT, the shares were up 1.3% to 71.45p.