Premier takes full control of Solan project west of Shetland

Offshore staff

LONDONPremier Oil has concluded two transactions for its Solan field development, west of Shetland.

The company has acquired Chrysaor’s 40% interest in Solan for nil upfront consideration. In return, Chrysaor will receive:

  • Payment of up to $3 million a year, offset against any subsequent royalty payments and net production interest
  • Royalty payments totaling up to $100 million after allowing for repayment to Premier of a notional outstanding loan of $530 million plus accrued interest.

The agreement gives Premier 100% of the field’s production, revenues, and capex. The operator estimates that the royalty payments would become payable at an average oil price above $75/bbl.

Separately, Premier has entered into an agreement with FlowStream Commodities, conditional on approval from the UK’s Department of Climate Change.

FlowStream will make a $100-million upfront payment to Premier in return for the proceeds from 15% of Premier’s production from the Solan field, the duration of which depends on production levels and future oil prices.

As for progress on offshore commissioning of the facilities, ahead of an anticipated production start during 4Q, the flotel Victory has moved to a new location and will be replaced by another flotel from early August. In the meantime, work will continue using a “walk-to-work” vessel.

The Ocean Valiant rig is preparing to drill the second pair of producer-injector wells.

06/02/2015

 

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