Bust North Sea operator Oilexco was snapped up by Premier Oil today in a £345 million deal.

The deal is being part-funded by a four-for-nine rights issue priced at half last night's closing share price but it will transform Premier's North Sea interests.

Oilexco fell into administration at the turn of the year, sounding the alarm throughout the industry about how the plunging oil price was hitting explorers and producers, who were either unable to fund their developments or service their debts. However, Oilexco's North Sea assets were, according to Premier chief executive Simon Lockett, too good an opportunity to miss when administrators Ernst & Young opened offers to up to five bidders.

Premier is paying a relatively cheap $8.50 a barrel for the assets across nearly 40 licences.

Oilexco's 13,700 barrels a day production doubles Premier's North Sea output while up to 100 million barrels of reserves and another 385 million barrels in possible reserves triples Premier's resources in the province.