Premier Oil snaps up Eon’s North Sea assets despite slumping crude prices
Brent crude dipped below $30 a barrell for the first time since 2004
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Your support makes all the difference.Turmoil in the oil market sparked a fresh shake-up of the sector, led by a $120m (£83m) deal by Premier Oil to buy scores of wells in the North Sea.
Premier will buy a portfolio from the German utility firm Eon, made up of upstream oil and gas assets, mainly located in the Central North Sea.
The FTSE 100-listed producer and explorer will use cash to fund the purchase, which will increase Premier’s production by about 15,000 barrels of oil equivalent per day this year.
Included in the portfolio is a small stake in the huge Elgin-Franklin gas fields off Aberdeen. The move indicates an ongoing scramble to readjust to the new level of lower oil prices.
The acquisition coincided with a well-received trading statement from the Africa-focused oil producer Tullow Oil. Shares in the FTSE 250 group ended 4.7 per cent higher after it said plans to hedge a slide in the value of assets had protected it from the ravages of the oil slide.
“In 2015, Tullow not only reset its business to deal with very difficult market conditions, but also delivered on its key operational goals. Strong West African oil production supported by a significant hedge programme delivered pre-tax operating cash flow of $1bn,” said Aidan Heavey, its chief executive.
The oil price slump was one of the determining factors of business performance for many firms last year, after a supply glut by big oil-producing nations and lower levels of consumption from China drove down demand.
Brent crude is trading at its lowest levels since 2004, briefly falling below $30 a barrel before settling down 2 per cent at $30.21. Banks such as Morgan Stanley have predicted the price could slide to as low as $20, if the dollar continues to strengthen.
The turmoil claimed a victim in the UK, when GMP Securities – a small oil and gas-focused broker – closed its London office, leading to 30 job losses. The Toronto-headquartered company is also pulling out of Australia.
One powerhouse taking advantage of the slide is the superstar investor Warren Buffett. He has been snapping up shares in the US midstream oil refinery company Phillips 66, a spin off from oil giant ConocoPhillips. Mr Buffett’s Berkshire Hathaway, which also part-owns companies such as Heinz, Coca-Cola and IBM, bought $190m worth of shares in the company over three days, according to a regulatory filing, paying an average of $77.22 per share.
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