If approved, this would create the largest independent oil and gas company listed on the London Stock Exchange, they claimed, with combined production of more than 250,000 boe/d, and total 2P reserves of 717 MMboe, as of Dec. 31, 2019.
Under the proposals, Premier would merge with Chrysaor via a reverse takeover, with Premier stakeholders and shareholders owning up to 23% of the combined group, and Chrysaor’s shareholders (the largest being Harbour) owning at least 77%.
At the same time, Premier’s $2.7 billion of debt and certain hedging liabilities will be repaid and cancelled on completion of the merger.
Linda Z. Cook, currently CEO of Harbour, will serve as CEO of the combined group. Chrysaor CEO Phil Kirk will be president and CEO Europe.
Chrysaor is already one of the UK North Sea’s largest producers. Premier’s UK portfolio includes the operated Catcher Area fields in the UK central North Sea; the Solan oilfield west of Shetland; and the Tolmount gas development in the southern North Sea.
But the company also has extensive E&P interests worldwide, which include a share of block 7 offshore Mexico, containing the Zama discovery; the Sea Lion oilfield development in the offshore North Falkland basin; producing oil and gas fields in the Natuna Sea offshore Vietnam and Indonesia; and frontier exploration acreage offshore Brazil.
The two companies had combined H1 2020 revenues of $1.76 billion and operating costs of $10.5/boe. Their stated goal is to create a business with a stable platform for future growth and the ability to fund and realize value from the various development and international exploration projects.
Linda Cook said: “This transaction is the next step in Harbour’s aspiration to develop a new independent E&P company with global relevance. It significantly advances our leading position in the North Sea, where we will continue to re-invest, and expands our geographic footprint to Asia and Latin America.”
Oil and Gas UK chief executive Deirdre Michie said: “Chrysaor and Premier Oil are great stewards, contributors and champions of this industry so this investment is encouraging news for the UK continental shelf.
“With companies increasingly looking to see how they can work together to meet as much of our oil and gas demand from domestic resources instead of imports, this merger will help to stimulate further activity for our hard-pressed supply chain and contribute to an inclusive transition towards a low carbon economy.”
Daniel Rogers, oil and gas analyst at GlobalData, said: “With Premier Oil carrying a $2-billion debt load, and private equity players unable to execute high-value exit strategies through IPOs or divestments under current market conditions, this deal makes a lot of sense for both parties. With the stock price down over 80% from the start of the year, Chrysaor will take advantage of the depressed market value as an expansion opportunity and to list the combined businesses on the London Stock Exchange.
“The two companies will create a dominant North Sea player with production of around 250,000 boe/d and growth opportunities such as the Tolmount gas development – which GlobalData expects to boost the combined production to almost 270,000 boe/d in 2021…
“The combined entity will have a strengthened financial backing that should allow Premier’s pre-sanctioned growth developments to move forward.”