Premier agrees terms for EnCore takeover

Premier Oil has agreed to acquire fellow UK independent EnCore Oil.

Offshore staff

LONDON – Premier Oil has agreed to acquire fellow UK independent EnCore Oil.

Assuming approval from shareholders for the deal, which values EnCore's entire issued and to be issued share capital at around $340 million, Premier would:

• Increase its interest in UK North Sea license PL1430 (the Catcher area), by 15% to 50%. The concession includes Catcher field, thought to be one of the largest discoveries in the UK North Sea in recent years
• Gain operatorship of the Catcher area, allowing Premier to work with the remaining partners to optimize field development
• Add a 16.6% interest in the Sterling Resources-operated Cladhan discovery
• Gain stakes in the Coaster prospect east of Catcher (100%) and the Tudor Rose (40%) and Spaniards (28%) prospects close to the Scott area facilities, where Premier is a partner
• Receive around 17 MMbbl of discovered oil reserves and resources from wells drilled to date in the Catcher and Cladhan areas
• Take on EnCore's UK ring-fenced tax losses, currently estimated at $48 million.

Premier plans to finance the acquisition from its available cash resources, but expects to maintain a strong financial position and retain its ability to fund its development and exploration program.

Earlier this week, the company spudded its first operated well offshore Norway on the Gardrofa prospect. The 9/1-1S well is expected to reach total depth in late October.

In the UK North Sea, Premier says the (Eocene Tay) Erne prospect in PL1875 should spud in the next three weeks using the semisub WilPhoenix.

Also in the Greater Fyne area, the East Fyne appraisal well should spud in early November, using the Sedco704 rig, which will then drill the Bluebell prospect.

In the Catcher area license, 3D seismic acquisition is nearing completion and the next well on the Carnaby prospect is due to spud in early 2012.

10/05/2011

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