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Wednesday, September 23, 2020

Premier Oil in early talks on deal with Chrysaor

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PREMIER Oil and Chrysaor have held preliminary talks about a potential deal that would bring together two of the largest UK oil and gas producers, according to people with knowledge of the matter.

The two companies have discussed a possible combination of part or all of their businesses, according to the people, who asked not to be identified because the information is private.

One option under consideration would involve a full merger following a restructuring of Premier’s $2 billion in debt, the people said.

Premier confirmed it “has been in discussions with a number of third parties, including Chrysaor, regarding alternative forms of transactions to secure the long-term refinancing of the group’s debt facilities.”

The terms discussed so far aren’t better for shareholders or creditors than those proposed back in August, it said Tuesday in a statement.

The situation is fluid and there’s no certainty a deal will materialise, according to Premier.

Its shares jumped as much as 20% in London, the most in three months, and traded up 8.8% at 19.14 pence as of 2:22 p.m. local time.

Premier’s market value has slumped 81% this year to about $228 million.

The oil and gas producer has spent most of the year laboring to restructure its debt, becoming embroiled in a public clash with its largest creditor, Asia Research & Capital Management.

Although Premier struck a refinancing deal in August, it must raise at least $325 million in equity to extend its debt and complete a planned purchase of North Sea fields from BP.

A refinancing agreement remains Premier’s preferred option for now, according to the people.

In the event that it’s unable to satisfy terms with creditors, a deal with Chrysaor would be one possible option. Nevertheless, Chrysaor wouldn’t buy Premier without a reduction in its debt load, the people said.

Chrysaor declined to comment.

Despite the debt burden, Premier’s $4 billion of tax losses could be attractive to a potential buyer, the people said.

Oil and gas companies operating in the UK can carry forward tax losses and offset them against future profits.

Chrysaor, a North Sea-focused business founded in 2007, made a big splash in the region in 2017 when it paid $3 billion for a package of assets from Shell.

The company, backed by private equity firm Harbour Energy, has since become the number one oil and gas producer in Britain, having bought assets from Spirit Energy in 2018, as well as ConocoPhillips’s UK division.

Premier Oil and Chrysaor have held preliminary talks about a potential deal that would bring together two of the largest UK oil and gas producers, according to people with knowledge of the matter.

The two companies have discussed a possible combination of part or all of their businesses, according to the people, who asked not to be identified because the information is private.

One option under consideration would involve a full merger following a restructuring of Premier’s $2 billion in debt, the people said.

Premier confirmed it “has been in discussions with a number of third parties, including Chrysaor, regarding alternative forms of transactions to secure the long-term refinancing of the group’s debt facilities.”

The terms discussed so far aren’t better for shareholders or creditors than those proposed back in August, it said Tuesday in a statement.

The situation is fluid and there’s no certainty a deal will materialise, according to Premier.

Its shares jumped as much as 20% in London, the most in three months, and traded up 8.8% at 19.14 pence as of 2:22 p.m. local time.

Premier’s market value has slumped 81% this year to about $228 million.

The oil and gas producer has spent most of the year laboring to restructure its debt, becoming embroiled in a public clash with its largest creditor, Asia Research & Capital Management.

Although Premier struck a refinancing deal in August, it must raise at least $325 million in equity to extend its debt and complete a planned purchase of North Sea fields from BP.

A refinancing agreement remains Premier’s preferred option for now, according to the people.

In the event that it’s unable to satisfy terms with creditors, a deal with Chrysaor would be one possible option. Nevertheless, Chrysaor wouldn’t buy Premier without a reduction in its debt load, the people said.

Chrysaor declined to comment.

Despite the debt burden, Premier’s $4 billion of tax losses could be attractive to a potential buyer, the people said.

Oil and gas companies operating in the UK can carry forward tax losses and offset them against future profits.

Chrysaor, a North Sea-focused business founded in 2007, made a big splash in the region in 2017 when it paid $3 billion for a package of assets from Shell.

The company, backed by private equity firm Harbour Energy, has since become the number one oil and gas producer in Britain, having bought assets from Spirit Energy in 2018, as well as ConocoPhillips’s UK division.

 

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