Premier Oil acquires Encore and boosts industry confidence

Oil industry firm Premier Oil has announced the acquisition of Encore Oil in a deal worth £220 million, which is expected to have a reverberating impact on other small UK organisations.

The deal is set to increase Premier's stake in the Catcher field, which is one of the largest discoveries ever in the North Sea in recent years – to 50 per cent, a rise of 15 percentage points.

Numis analyst Mathew Lambourne believes that the deal will increase confidence in the key oil field development project, predicting that the first oil will come from Catcher in early 2015.

"With Premier's Catcher stake now increasing to 50 per cent and the company assuming operatorship of the asset, we believe any concerns that the market had regarding the delivery of the Catcher development will have been eased," he noted.

Meanwhile, analysts at North Sea Westhouse Securities said that, given the recent sell-off in the exploration and production sector, it has been a question of when, not if, consolidation would start.