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5 Pages

Premier Oil sells its 33.8% stake in Wytch Farm to an undisclosed buyer for US$200 million

Premier Oil sells its 33.8% stake in Wytch Farm to an undisclosed buyer for US$200 million

Report summary

On 22 August 2017, Premier Oil announced the sale of its 33.8% stake in Wytch Farm assets for US$200 million to an undisclosed third party. Wytch Farm, located in the Wessex Basin, came onstream in 1979 and is Europe's largest onshore oil field. The field is now more than 90% depleted with production at less than one-sixth of its 1996 peak, but is a steady producer with at least 10 years of production left. We value Premier Oil's stake in Wytch Farm at US$156 million (NPV10, 1 January 2017), on a standalone basis. The acquisition comes at a premium to our valuation, suggesting the buyer sees an opportunity to unlock further value from the asset. There is upside beyond what we model as base case. The asset could also suit a buyer in a tax loss position.

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The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.

This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.

This Upstream Oil and Gas Deal Insight report provides an in-depth analysis of this deal. You will also find information about upstream assets and the strategic rationale behind the deal.

For investors and businesses, this deal insight report provides an understanding of the effect this deal will have on the market, including oil and gas pricing and assumptions. Use it to keep up to date with deal announcements, gain expert insights and analyse potential developments that might affect your strategy.

Wood Mackenzie goes beyond company-reported data and announcements to give you an independent and informed view. Our unique valuation metrics are underpinned by our deep understanding of upstream assets and companies. We help you objectively benchmark and evaluate asset and corporate deals so you can compare deal economics around the world.

  • Executive summary
  • Transaction details
  • Upstream assets
  • Deal analysis
  • Upsides and risks
    • Upsides
    • Risks
  • Strategic rationale
  • Oil & gas pricing and assumptions

In this report there are 7 tables or charts, including:

  • Executive summary
    • Executive summary: Table 1
  • Transaction details
  • Upstream assets
    • Upstream assets: Table 1
  • Deal analysis
    • Deal analysis: Table 1
    • Deal analysis: Table 2
    • Deal analysis: Table 3
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions
    • Oil & gas pricing and assumptions: Table 1
    • Oil & gas pricing and assumptions: Table 2
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