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By Shadia Nasralla
LONDON, May 13 (Reuters) - Premier Oil is asking BP
to cut the sale price of two North Sea oilfields in a
proposed $625 million deal due to weak oil prices, Chief
Executive Tony Durrant said on Wednesday.
The company is also talking to shareholders, creditors and
brokers to adjust a plan to extend debt maturities and raise
equity, Premier said in a trading statement.
Durrant told Reuters he was confident that Premier's banks
would waive a so-called covenant test in June, a regular
exercise by banks to check if the oil and gas producer's debt is
less than three times its core earnings, which Premier is on
course to breach.
Premier expects to be free cash flow neutral despite
slumping prices due to its hedging programme, which sees 30% of
its 2020 production protected at $60 a barrel. Its net debt
stood at $1.91 billion at the end of April, dwarfing Premier’s
market capitalisation of about $280 million.
Proposed acquisitions include BP's stake in the Andrew and
Shearwater fields in the North Sea for $625 million and
increasing Premier's stake in the Tolmount gas project, also in
the North Sea, for $191 million. The deals are currently based
on raising capital of at least $350 million.
A court last month approved a scheme with creditors to
postpone Premier's debt maturities by more than two years to
late 2023. But one debt holder, hedge fund ARCM, appealed
against the plan, holding up further moves until the appeal is
resolved.
Premier has $160 million of unrestricted cash and $330
million of undrawn debt facilities.
(Reporting by Shadia Nasralla; Editing by Edmund Blair)
