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* BP agreed to make part of payment contingent on oil price
rise
* BP agreed to pay higher share of abandonment costs
* Premier needs fresh permission to extend debt maturities
* ARCM to reduce short position with new shares
(Adds details on new price for assets, share issue)
By Shadia Nasralla
LONDON, June 5 (Reuters) - British oil major BP has
agreed to discount the price of the North Sea assets it is
selling to Premier Oil, Premier said on Friday.
Under the new deal, Premier only has to pay $115 million out
of the initial price of $625 million if oil prices, which have
slumped around 40% this year and currently stand at around $40 a
barrel, rise above $55 a barrel.
The agreement also reduces Premier's liability for field
abandonment to $240 million from $600 million.
The revised price highlights how the crude price collapse is
forcing sellers of oil and gas asset to compromise.
"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 statement.
Under the deal, which is effective from January 2019, BP
will retain the $300 million the North Sea fields generated
throughout 2019, bringing the cash payment due to the British
oil major down to around $210 million.
To fund the acquisition, Premier said it would issue 82.2
million new shares to activist investor ARCM at a price of 26.69
pence each, a 9.64% discount to the volume-weighted average
price over the last five days.
This represents around 9% of the company, which had a market
capitalisation of $336 million as of Thursday and $1.9 billion
in net debt.
The new arrangement with ARCM, which owns around 15% of
Premier's debt and has a large short position in its shares,
allows Premier to proceed with the deal. ARCM will use the new
shares to reduce its short position of around 17%.
Meanwhile, Premier will have to go through a new formal
process over the coming weeks to extend its debt maturities from
May 2021 into late 2023 as envisaged under the initial BP deal.
Shares in Premier rose on Friday to their highest since oil
prices collapsed in early March. They were up around 9% at 0725
GMT, at 34.60 pence.
(Reporting by Shadia Nasralla; editing by Jason Neely and
Pravin Char)
