Premier Oil Proposed Acquisition Of Encore Gets A Unanimous Nod

The Board of EnCore Oil plc and the Board of Premier Oil plc have reached an agreement on the terms of a recommended acquisition by Premier (or one of its wholly owned subsidiaries) of the entire issued and to be issued share capital of EnCore.

Highlights

• Recommended acquisition at 70 pence per EnCore Share in cash. EnCore Shareholders can also elect to receive 0.2067 New Premier Shares for each EnCore Share held instead of part or all of the cash consideration.
• The Acquisition values EnCore's entire issued and to be issued share capital at approximately £221 million (approximately US$340 million).
• The Acquisition Price represents a premium of approximately 55 per cent. to the Closing Price of 45.25 pence for each EnCore Share on 4 October 2011, the last Business Day prior to the issue of this announcement.
• The Acquisition is in line with Premier's strategy of acquiring high quality assets in existing core areas using its strong balance sheet. Specifically, the Acquisition would:

1. increase Premier's interest in UK Licence PL1430 (the Catcher area), including the Catcher field, one of the largest discoveries in the UK North Sea in recent years, by 15 per cent. taking Premier's overall interest to 50 per cent.;
2. provide Premier with operatorship of the Catcher area, allowing Premier to work with the remaining partners to optimise field development;
3. add a 16.6 per cent. interest in the Cladhan discovery;
4. build on Premier's active UK exploration programme through the additions of the Coaster prospect east of Catcher (100 per cent.) and the Tudor Rose (40 per cent.) and Spaniards (28 per cent.) prospects close to Premier's existing Scott area facilities;
5. add an additional estimated 17 million barrels of discovered oil reserves and resources from wells drilled to date in the Catcher and Cladhan areas;
6. include EnCore's UK ring fenced tax losses, currently estimated based on EnCore's historic expenditures to be approximately £31 million; and
7. enable Premier to build on the success already achieved by EnCore by applying Premier's greater operational and financial strength to EnCore's portfolio.

• The Acquisition will be financed from available cash resources. Premier will maintain a strong financial position and retain its ability to fund its active development and exploration programmes.
• The EnCore Directors, who have been so advised by Rothschild, consider the terms of the Acquisition to be fair and reasonable to EnCore Shareholders. Accordingly, the EnCore Directors intend unanimously to recommend that all EnCore Shareholders vote in favour of the resolutions relating to the Acquisition at the Meetings (or in the event that the Acquisition is implemented by way of an Offer, that EnCore Shareholders accept the cash payable under such offer).
• The EnCore Directors are not making, and do not intend to make, any recommendation in relation to the Share Alternative. The EnCore Directors will set out in the Scheme Document their views on the Share Alternative and the factors they consider most relevant for EnCore Shareholders to consider in this respect. EnCore Shareholders are strongly recommended to seek their own independent financial, tax and legal advice in light of their own particular circumstances and investment objectives before deciding whether to elect for the Share Alternative. Further details of the Share Alternative are set out in paragraph 9 of the full text of this announcement below.
• Premier has received irrevocable undertakings from the EnCore Directors to vote in favour of the Scheme in respect of their entire beneficial holdings totalling 21,692,984 issued EnCore Shares in aggregate and representing approximately 7.4 per cent. of EnCore's issued share capital. Certain of the EnCore Directors have also irrevocably undertaken to elect for the Share Alternative. Further details of these irrevocable undertakings are set out at paragraph 10 and Appendix 3 of this announcement.
• In addition, EnCore's largest shareholder, BlackRock Investment Management (UK) Limited ("BlackRock"), has confirmed its current intention to vote in favour of the Scheme. BlackRock currently controls voting rights in respect of 17,049,983 EnCore Shares representing approximately 5.8 per cent. of EnCore's issued share capital.
• It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement.

Commenting on today's announcement, Simon Lockett, chief executive officer of Premier said: "We are pleased to reach agreement with the Board of EnCore, who have unanimously recommended our proposed offer, and we look forward to building on what they have achieved with the business to date.

"This is a perfect fit for Premier given our existing North Sea assets. Operatorship of and the increased equity position in Catcher will help us to progress this development in line with our timeframe and maintain momentum across our portfolio.

"In addition to existing discoveries, this acquisition will also add a number of exploration prospects to our 2011 and 2012 exploration programme.

"We continue to prove through opportunities such as this that we can move quickly to add future production, reserves and resources to our portfolio.

"We look forward to working with the EnCore team through the transition to new ownership and welcoming EnCore employees to Premier."

Commenting on the Acquisition, Alan Booth, chief executive officer of EnCore said: "The Acquisition de-risks EnCore's development portfolio of assets, providing EnCore Shareholders with an opportunity to crystallise the value created through EnCore's highly successful exploration track record. The Acquisition is in line with EnCore's long stated strategy, and also gives EnCore Shareholders the option of retaining exposure to EnCore's assets within the enlarged portfolio via the Share Alternative.

"I would like to thank all the EnCore Directors and employees for their contribution to the success of the company, which I am sure will continue under Premier's ownership."