LONDON, UK: Premier Oil Plc has announced proposed acquisitions of the Andrew Area and Shearwater assets from BP for US$625 million, and an additional 25 percent interest in the Premier operated Tolmount Area from Dana for US$191 million plus contingent payments of up to US$55 million.
The proposed acquisitions will be funded via a US$500 million equity raise (net of expenses) which has been fully underwritten on a standby basis, existing cash resources and, if required, an Acquisition Bridge Facility of US$300 million.
Premier expects that the equity raise will include both a placing and rights issue component with any shares issued under the placing qualifying for the subsequent pre-emptive rights issue. It expects to confirm the structure and terms in Q1 2020 following consultation with major shareholders.
Lender consent for the proposed Acquisitions, related funding arrangements and extension of credit facilities will be sought via two Court-approved schemes of arrangement.
Of the creditors subject to the Schemes, 83.3 percent of Super Senior Commitments and 72.7 percent of the Senior Commitments have already committed to approve the Schemes.
The Andrew and the Shearwater Acquisitions constitute a class 1 transaction. Shareholder approval for all of the Acquisitions and the equity raise will be sought at a general meeting expected to be held in Q1 2020.
The Directors believe that the Acquisitions represent a highly attractive opportunity and recommend that Premier’s shareholders vote in favour of the resolutions, as the Directors intend to do in respect of their holdings, at the general meeting. Premier will send a combined prospectus and circular to its shareholders convening the general meeting in due course.
The Acquisitions have an effective date of 1 January 2019 and completion of all three Acquisitions is expected to occur by the end of Q3 2020.
Tony Durrant, Chief Executive, commented: “These acquisitions are materially value accretive for Premier and are in line with our stated strategy of acquiring cash generative assets in the UK North Sea. We look forward to realising the significant long-term potential of the Andrew and Shearwater assets through production optimisation, incremental developments and field life extension projects. We are also pleased to have consolidated our interest in the high return Tolmount development where we see material upside. The cash flow generated from the acquired assets will also accelerate the deleveraging of Premier’s balance sheet.”
Premier also announced the proposed extension of its existing credit facilities to 30 November 2023.