London — Premier Oil will combine with Chrysaor in a reverse takeover, creating the largest listed independent oil and gas producer in the UK North Sea.
The deal marks the end of a difficult period for Premier, which has spent most of the year labouring to restructure its debt, during which time its shares have tumbled more than 80%.
The transaction will result in a company pumping more than 250,000 barrels of oil equivalent a day, Premier said on Tuesday. Its shareholders will end up with just a sliver of the combined group — no more than 5.45%, while Chrysaor shareholders will get at least 77% and Premier’s other stakeholders the rest.
“Premier shareholders gain a low-premium merger with upside from materially reduced balance-sheet risk and tax synergies,” analysts at Jefferies said in a note. They estimate as much as $250m of equity value to Premier shareholders.
Premier jumped as much as 24% at the open in London on Tuesday, trading up 12% at 16.94p.
The company’s $2.7bn of total gross debt and certain hedging liabilities will be repaid and cancelled on deal completion, according to the statement. A cash payment of $1.23bn will be made to Premier’s creditors, who will also be offered shares in the combined group. Premier’s $400m of letters of credit will be refinanced.
Chrysaor, a North Sea-focused business founded in 2007, made a big splash in the region in 2017 when it paid $3bn for a package of assets from Royal Dutch Shell. The company, backed by private equity firm Harbour Energy, has since become the No 1 oil and gas producer in Britain, having bought assets from Spirit Energy in 2018, as well as ConocoPhillips’s UK division.
The deal means that Premier’s earlier agreement to acquire some North Sea assets from BP has been cancelled, CEO Tony Durrant said. Separately, BP said it would retain ownership of the assets and consider options for their future.
Durrant will step down at the end of the year, he said. Linda Cook, now CEO of Harbour, will take on the role at the combined group.
The transaction is subject to regulatory approvals and approval by Premier’s shareholders and existing creditors.
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