Company Announcements

SPAs signed for BP Acquisitions

Source: RNS
RNS Number : 4174T
Premier Oil PLC
20 July 2020

Premier Oil plc

"Premier" or the "Company" or the "Group"

SPAs signed for BP Acquisitions

20 July 2020


Premier is pleased to announce that it has signed sale and purchase agreements ("SPAs") with BP for the acquisition of BP's interests in the Andrew Area and its Shearwater assets (together, the "BP Acquisitions"), reflecting the amended terms announced by the Company on 5th June.  This follows the receipt of creditor approval for the BP Acquisitions. The BP Acquisitions remain conditional on agreeing the terms of the refinancing of Premier's existing credit facilities, equity funding and customary other approvals, including shareholder approval.


As previously announced by the Company on 5th June, Premier will pay BP $210 million upon completion of the BP Acquisitions. Premier plans to fully fund the $210 million completion consideration via an equity raise (net of expenses), which is expected to include a pre-emptive component. Completion of the acquisitions is targeted to occur by the end of September 2020. 


In addition, pursuant to the terms of the SPAs, up to a further currently estimated $115 million would become payable by Premier to BP based on higher future oil and gas prices. This further consideration would be funded from the revenues of the acquired assets.


BP will retain 100 per cent of the existing Shearwater abandonment costs and 50 per cent of the existing Andrew Area abandonment costs resulting in an estimated $240 million (pre-tax) of abandonment obligations to be taken on by Premier.


The BP Acquisitions are in line with the Group's stated strategy and will strengthen Premier's business through the addition of operated, low cost, producing assets. The Andrew Area and Shearwater assets, which will contribute to rising Group production, are immediately cash generative and will accelerate the use of Premier's $4.1 billion of UK tax losses. The additional free cash flow generation will accelerate debt reduction and the deleveraging of Premier's balance sheet.


The BP Acquisitions constitute a class 1 transaction and are conditional upon the Company obtaining shareholder approval for the acquisitions and admission of the shares issued in connection with the equity raise.  As previously announced, Premier is working with a subset of its creditors to agree revised terms for a long term extension to the Group credit maturities which can be recommended to the full creditor group for approval by the end of July.  It is expected that a prospectus and circular, which will include terms of the equity funding for the BP Acquisitions, will be published following creditor approval of the refinancing terms. 


Tony Durrant, Chief Executive officer, commented:

"The signing of the SPAs with BP is another important milestone in completing the value-accretive BP Acquisitions which consolidates the Group's position in the UK North Sea, one of our core areas, while, at the same time, accelerates the deleveraging of our balance sheet."


Premier Oil plc

Tony Durrant, CEO

Richard Rose, Finance Director
Tel: 020 7824 1116


Billy Clegg

Georgia Edmonds

James Crothers
Tel: 020 3757 4983


Notes to editors

During 2019, production from the Andrew Area and Shearwater assets averaged 19.1 kboepd and 4.4 kboepd, respectively, generating over $300 million of net cash flow.  The gross assets at 31 December 2019 attributable to BP's interests in the Andrew Area and Shearwater field were $428 million and $138 million, respectively.  2019 losses attributable to BP's interests in the Andrew Area and Shearwater field were $53.5 million, reflecting a one off c. $64 million historic cost, and $1.3 million, respectively.

The acquisition of the Shearwater field (the "Shearwater Acquisition") will be conditional upon BP's joint venture partners waiving or not exercising contractual rights to make an offer to acquire BP's interests in the Shearwater field.  In the event the interests are acquired pursuant to the exercise of any such right, the Shearwater Acquisition will not proceed. 

Pursuant to the terms of the SPAs, the contingent consideration of up to a further currently estimated $115 million would become payable by Premier to BP to the extent that the average oil or gas price exceeds $55/bbl and 35p/therm respectively during each month for up to five years following completion.





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