Premier Oil creditor asks firm to drop North Sea acquisitions
Hong Kong-based hedge fund combating Premier Oil over $ 2.9 billion refinance calls on U.Okay. firm to drop $ 871 million of North Sea acquisitions and give attention to money circulation as oil costs stay underneath stress.
Asia Analysis and Capital Administration mentioned on Thursday that the BP and Korea Nationwide Oil Company (KNOC) acquisitions – which Premier introduced in January alongside its refinancing proposals – had been negotiated final yr utilizing pricing futures for oil and gasoline which “had been unrealistic on the time and are much more unrealistic right now.” These futures costs had been $ 70 / barrel for Brent crude and 50 pence per therm for British gasoline, the ARCM mentioned.
Oil costs suffered one among their greatest day-long drops in historical past on Monday, as crude fell 30% to almost $ 30 a barrel after Saudi Arabia launched a conflict of aggressive pricing, including to present pressures fueled by world fears. unfold of coronavirus.
“We imagine Premier Oil ought to give attention to its money place and defend the stability sheet as a precedence,” ARCM mentioned in a press release.
“We encourage the corporate to interact with its collectors to discover a long-term answer that may considerably scale back its debt load and supply a steady stability sheet, from which the corporate might then cautiously search development alternatives.”
ARCM, which is Premier’s greatest lender but in addition holds a 17% quick place in its shares, hopes to derail the corporate’s refinancing and acquisitions at a listening to subsequent week in Edinburgh. The plans have already been authorised by a majority of different collectors, however the acquisitions are based mostly on a $ 500 million capital enhance from shareholders.
Premier shares fell 34% in early Thursday afternoon as traders continued to fret about its degree of leverage and its skill to finish refinancing and acquisitions.
Premier Oil warned in its annual outcomes final week that if the refinancing – which is able to lengthen the maturity of its loans by 2.5 years till November 2023 – and the acquisitions fail and that “situations of decrease costs and / or manufacturing materialized, “then he might cross the bar.” a number of ”of its monetary commitments this yr.
It faces alliance testing on the finish of every quarter, though the corporate additionally confused that it might take various “mitigation measures,” together with asset gross sales and downsizing. capital expenditure, to keep away from such a situation.
A Premier Oil spokesperson declined to touch upon Thursday.