Premier Oil sells its 33.8% stake in Wytch Farm to Perenco for US$200 million
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.