Times Article13 Jan 2019 10:24
Premier Oil, led by Tony Durrant, in cash call for North Sea fields
The debt-laden explorer Premier Oil is preparing to tap shareholders for cash to help it buy about $1.5bn of fields in the North Sea.
Premier is in the running to pick up fields being sold by US oil giant Chevron and is believed to be considering a rights issue or share placing to help pay for them should it win the auction. Industry sources said chief executive Tony Durrant could sell all or part of its Latin American business to help pay for the deal — and minimise the size of any share sale.
Premier’s shares have slumped from 500p in 2011 to less than 80p last week, valuing the company at below£650m and making an equity fundraising a tough sell.
Premier has made it past the initial round of bidding for the Chevron assets, but faces tough competition.
It is understood to be vying with the private equity-backed Chrysaor, the Israeli conglomerate Delek and Sir Jim Ratcliffe’s chemicals business Ineos.
The $1.5bn price tag is roughly twice Premier’s market value. Observers believe the company could make the pitch that the Chevron package would allow it to transform its sprawling portfolio into one more centred on the North Sea — where it has a huge reservoir of tax credits — and chart a quicker path out from under its $2.3bn (£1.8bn) debt mountain.
The auction is part of the latest carve-up of the North Sea, as challengers pick over fields being discarded by established firms.
Premier produces 80,000 barrels of oil a day from fields in the UK, Pakistan, Vietnam and Indonesia.
Its Latin American arm has stakes in exploration licences in Brazil, a 25% stake in the Zama block off Mexico, which is believed to have more than 1bn barrels of oil, and a share
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of the Sea Lion project in the Falkland Islands, which is thought to contain about 520m barrels.
Ratcliffe is also in talks with ConocoPhillips over a separate package worth about $2bn. It is believed that his interest in the Chevron package will depend on whether or not his Conoco deal goes through.
His exclusivity period of three months is understood to have been extended by one month as talks continue amid volatile oil prices.
Premier declined to comment on “market speculation”.
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