Premier Oil buys EnCore in £221m deal

By Rob Davies for the Daily Mail
Updated: 17:38 EDT, 5 October 2011

Premier Oil has agreed to buy North Sea explorer EnCore Oil in a £221million deal that will see the buyer pay a big premium in exchange for future growth prospects.

The 70p-per-share offer, which EnCore directors have recommended to shareholders, is 55 per cent above the target’s closing share price on the day before the bid was announced.

But sources close to Premier Oil (down 2.8p to 335.9p) pointed out the buyer has a £1.1billion tax allowance that will allow it to exploit EnCore’s fields more profitably than rivals could.

Satisfied: Premier chief executive Simon Lockett

The deal takes Premier’s stake in the 100m-barrel Catcher oilfield – the largest discovery in North Sea waters since 2007 - from 15 per cent to 50 per cent.

Premier will also assume operational control of the area, which it said would allow it to develop the prospects more efficiently.

A spokesman pointed out that Premier’s fourth acquisition this year means it has added 55million barrels of reserves for just $8 a barrel.

Premier chief executive Simon Lockett, left, said the two businesses were ‘a perfect fit’.

EnCore (up 28.75p to 74p) has carved out a reputation for big discoveries such as Catcher, while some of its staff were behind the largest ever North Sea find, the 730m-barrel Buzzard field discovered in 2001.