5th Jun 2020 10:03
(Alliance News) - Premier Oil PLC said Friday it has proposed an amendment to the terms for the acquisition of the Andrew Area and Shearwater fields in the UK North Sea from oil major BP PLC.
Shares in Premier Oil were 11% higher at 35.35 pence on Friday in London. BP shares were up 4.1% at 350.05p.
In addition, the FTSE 250 oil & gas firm is in discussions with some of its creditors to waive the group's financial covenants through to September 30 and to provide continued access to its revolving credit facilities.
For the BP deal, under the revised arrangements, the original payment of USD625 million will be set off by USD300 million of estimated cash flows to be retained by BP, and a further USD115 million to only be payable based on higher future oil and gas prices.
As a result, the revised cash to be paid on the completion of the acquisitions is set to be USD210 million and is expected to be funded with equity.
In addition, BP will retain 100% of the existing Shearwater abandonment costs and 50% of the existing Andrew Area abandonment costs.
One of the creditor agreements is a stable platform agreement with a subset of creditors representing 40% of its debt facilities to waive Premier's financial covenants and provide continued facility access. Once terms are agreed, Premier will seek formal support from its wider lending group for the agreement.
In addition, Premier has reached an agreement with Asia Research Capital Management for the creditor to withdraw its appeal of the court's judgement approving the scheme required for the facilities extension and the BP asset purchase.
In return, Premier Oil will issue 82.2 million shares to Asia Research Capital at a price of 26.69 pence each, which will raise USD27.5 million, the proceeds of which will be used to partly fund the acquisitions. Asia Research Capital will use the new shares to reduce its current short position, last reported being 17%.
"We are pleased to have agreed revised terms with BP for the proposed acquisition of the Andrew Area and Shearwater assets, which are materially value accretive for the company. The stable platform agreement, once agreed with and approved by lenders, will provide a basis for the company to continue discussions regarding proposed amendments to the group's existing credit facilities," said Chief Executive Officer Tony Durrant.
By Dayo Laniyan; [email protected]
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