PREMIER Oil has launched a $900 million (£680m) expansion drive in the North Sea as the upheaval in the area triggered by the crude price plunge continues.

London-based Premier has agreed to acquire a portfolio of North Sea assets from BP for $625m.

The company has also struck a deal to buy a 25 per cent stake in the Tolmount discovery from Korean-owned Dana Petroleum for up to $246m.

The deals will continue a process which has seen some big fish cut their exposure to the area in response to the sharp fall in the oil price since 2014.

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Premier is one of a number of firms that decided the resulting downturn created good opportunities to expand in the North Sea.

The acquisitions will cement Premier’s standing as one of the biggest players in the area, in which directors of the firm see good long-term potential.

BP has sold off a raft of North Sea assets in order to raise cash after the oil price fall compounded the problems caused by the disastrous spill on its acreage in the Gulf of Mexico in 2010.

The head of the company’s North Sea business, Ariel Flores, said the deal with Premier formed part of a plan to refocus on core growth areas in the basin.

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BP has invested heavily in developing giant fields West of Shetland which it expects will be in production for years.

The Tolmount deal will allow Dana to raise some cash while reducing the amount it must invest in developing the field. It will retain an interest in the asset.

The deals reflect Premier’s belief that the North Sea remains a very attractive area in which to invest.

The company expects to generate lots of cash from the producing assets it is acquiring and sees long term potential in them.

It has maintained a rapid expansion drive in the North Sea amid the challenges posed by the oil price fall.

The company has capitalised on the fact that assets have become available at much lower prices than they may have fetched during the boom that ended in 2014. The cost of support services has fallen sharply.

Premier is generating huge amounts of cash in the North Sea after starting production from the giant Catcher field east of Aberdeen in 2017.

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The company recently highlighted the strong performance of assets acquired with the North Sea portfolio it bought from German utility E.ON for $120m in 2016.

Chief executive Tony Durrant said the acquisitions announced yesterday were materially value accretive for Premier. The firm said its directors believed there were limited opportunities available in the UK North Sea to acquire high quality assets at such attractive valuations.

The portfolio it is acquiring from BP includes stakes in the giant Andrew and Shearwater fields east of Aberdeen.

Mr Durrant noted: “We look forward to realising the significant long-term potential of the Andrew and Shearwater assets through production optimisation, incremental developments and field life extension projects.”

The deal with Dana will allow Premier to increase its stake in the Tolmount field off Yorkshire to 75%. Premier bought in to the acreage containing Tolmount through the acquisition of the E.ON portfolio.Tolmount is expected to come onstream this year. A spokesperson for Dana said it is fully committed to the Tolmount development. It retains a 25% interest in the field.

Premier Oil shares closed up 16%, 16.3p, at 117.75p.

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The company plans to raise $500m equity to help fund the acquisitions.

Reuters reported that Premier Oil’s largest creditor, the hedge fund Asia Research and Capital Management, had said it would oppose the acquisitions and a plan announced by the company to extend its debt maturity.

A spokesperson for Premier Oil said: “We are confident we have enough support from 40 of the 41 holders in the debt to get the appropriate permissions.”

Premier produced an average 78,400 barrels oil equivalent per day in 2019, against 80,500 boepd in 2018.

The company sold its producing operations in Pakistan in March for $56m.

UK production averaged 54,200 boepd during 2019, up 16% on 2018.

The company also has assets in Indonesia, Vietnam and the Americas.

It reduced net debt by $330m in 2019, to $1.99 billion, in line with guidance.

North America-focused Navitas Petroleum has agreed to acquire a 30% stake in Premier and Rockhopper’s Sea Lion development project off the Falkland Islands. The field is estimated to contain 530 million barrels of oil.