Premier Oil To Raise GBP300 Million More Equity As Refinances Debt
Premier Oil PLC on Thursday said it took a knock in the first half of 2020 due to a double set of challenges, as it agreed to refinance its debt facilities and plans to raise more equity.
The oil company with gas and oil interests in the UK, Asia, Africa and Mexico swung to a pretax loss in the half year ended June 30 of USD671.5 million from a profit of USD120.6 million a year prior.
Sales revenue fell 39% to USD530.6 million from USD871.3 million year on year.
Production was 67,300 barrels of oil equivalent per day, down 20% from 84,100 barrels of oil equivalent per day a year prior. This was however in line with the company’s 2020 guidance.
The company said the decrease in production was due to an unplanned 20-day shutdown at the Catcher area in the North Sea, the disposal of its Pakistan business which completed in the first half of last year, and the cessation of production at Huntington and Kyle, also both located in the North Sea.
Premier Oil faced two main challenges over the half.
“The first half of the year saw significant commodity price weakness and volatility, driven by the unprecedented collapse in global oil demand due to the Covid-19 pandemic,” Premier Oil said.
Premier Oil plans to acquire BP PLC’s interests in the Andrew area and the Shearwater field in the North Sea. These acquisitions are to help accelerate the use of the company’s USD4.10 billion of tax losses and the deleveraging of its balance sheet, the company said.
Premier Oil additionally on Thursday announced that it has agreed heads of terms for a long-term refinancing of over 45% of its debt facilities.
Premier Oil’s USD2.9 billion in debt facilities are to be refinanced with non-amortising facilities, extending its credit maturities from May 2021 to March 2025.
The company’s covenants profile is to be reset to provide enough headroom for a prolonged commodity slump.
Premier Oil said there will be a harmonised interest rate of 8.3% to be applied to its credit facilities.
The company plans to raise a further USD300 million in equity, in addition to the USD230 million it already announced to fund the proposed BP acquisitions as previously disclosed.
Premier Oil’s debt refinancing is conditional on at least a USD325 million take-up of the equity raise.
Premier Oil said: “Completing the proposed BP acquisitions and the refinancing of Premier’s debt facilities remains a key near-term corporate priority for the group. These proposed transactions will help normalise Premier’s balance sheet and allow the group to benefit from additional free cash flow generation to continue to reduce debt.
The company said: “With a strengthened balance sheet and strongly rising near-term production, Premier will be well placed to start reinvesting in some of its growth projects to deliver value for all of its stakeholders.”
Premier Oil shares were down 17% at 28.09 pence each on Thursday morning in London.
Source: LSE
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Published: 20-08-2020
