Premier, BP slash consideration in revised North Sea deal
Premier Oil Plc has agreed, in principle, on revised terms of a January deal to acquire Andrew area and Shearwater assets in the North Sea from BP Plc.
The structure of the consideration and phasing of payments are being adjusted to reflect the material developments in global commodity markets, Premier said in a release on the 5th June.
Subject to debt and shareholder approvals, the deal is expected to close by the 30th September.
BP currently operates the Andrew assets, comprising the Andrew platform, Andrew (62.75%), Arundel (100%), Cyrus (100%), Farragon (50%), and Kinnoull (77.06%) fields, and associated subsea infrastructure.
The hub started production in 1996. Average daily production in 2019 was 25,000-30,000 boe/d.
BP holds a 27.5% stake in the Shell-operated Shearwater field – a high pressure, high temperature reservoir produced through a process, utilities and quarters platform 140 miles east of Aberdeen.
Shearwater’s 2019 production was some 14,000 boe/d gross.
Revised terms include cash payable to BP at completion of US$210 million, and reduced abandonment obligations of US$240 million (pre-tax) from US$600 million (pre-tax).
BP would retain 100% of the existing Shearwater abandonment costs and 50% of the existing Andrew Area abandonment costs.
The original consideration of US$625 million at the effective date of the 1st January 2019, would be set off by US$300 million of estimated interim period cash flows to be retained by BP and a further US$115 million would only become payable based on higher future oil and gas prices.
Premier is in discussions with certain creditors to waive financial covenants through to the 30th September and to provide continued access to its revolving credit facilities.
If agreed and finalised, the terms will be put to the wider creditor group for approval. The company has agreed with Asia Research Capital Management, its largest creditor, to issue 82.2 million new shares to raise US$27.5 million, the proceeds of which will be used to fund part of the proposed BP acquisitions and ongoing capital investments.
Source: Oil & Gas Journal