Premier Oil buys Encore for £220m

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The Independent Online

Premier Oil has agreed to buy Encore Oil for £220m in a deal that will significantly expand its presence in the North Sea and could trigger a series of transactions among the smaller UK explorers.

The takeover will increasePremier's stake in the Catcher field – one of the biggest discoveries in the North Sea in recent years – by 15percentage points to 50 per cent.

Analysts said that after a longperiod of subdued deal activity in the E&P – exploration and production – sector, the deal could prompt a flurry of transactions among the smaller players.

"Given the recent sell-off in the E&P sector, it has been a question of when, and not if, consolidation would start....[this] could signal the start of a period of consolidation within the listed exploration and production sector," said analysts at North Sea Westhouse Securities. They tipped Nautical Petroleum, a small North Sea operator, as one likely target.