Premier Oil to Acquire Andrew, Shearwater, and Tolmount Asset Stakes in UK

Updated 1 year 4 months ago

In January 2020, Premier Oil agreed to acquire the Andrew Area and Shearwater assets from BP for $625 million as well as an additional 25% interest in the Tolmount from Dana Petroleum for $191 million plus contingent payments up to $55 million. The company also proposed to extend its existing credit facilities to November 30, 2023. These acquisitions would add 23,000 barrels of oil equivalent per day in 2019 with development upside with assets forecast to generate over $1 billion of free cash flow to the end of 2023. This would add 82 million barrels of oil equivalent of reserves and contingent resources at an implied cost of less than $10 per barrel. The Andrew Area includes 50-100% in five fields and operatorship with near-term development opportunities in the Andrew Lower Cretaceous reservoir. BP holds a 27.5% interest in the Shearwater asset.

The acquisition will be funded by a $500 million equity raise which has been fully underwritten, existing cash, and a $300 bridge facility if necessary. The equity raise will include both a placing and rights issue component with any shares issues under the placement qualifying for the subsequent preemptive rights issue. Premier expects to confirm the structure and terms in 1Q 2020. The acquisitions have an effective date of January 1, 2019, and closing is expected to occur by the end of 3Q 2020. Premier's largest creditor, Asia Research Capital Management (ARCM), published a press release the same day as the deal announcement in opposition to the extensions of debt maturity associated with the acquisitions. In May, Premier requested to reduce the deal price in response to declining oil prices. RBC Capital Markets served as a financial advisor to Premier.