Chrysaor and Premier Oil have announced plans to merge, creating the largest independent oil and gas company listed on the London Stock Exchange.
The firms said the proposed all-share merger represented a reverse takeover, with Premier stakeholders owning up to 23% of the enlarged group and Chrysaor shareholders owning at least 77%.
Chrysaor’s biggest shareholder, Harbour Energy, an investment vehicle formed by EIG Global Energy Partners, will own up to 39.02%.
Premier’s £2 billion of total gross debt will be repaid on completion of the deal, subject to approval from regulators, shareholders and creditors.
It means Premier will not proceed with the refinancing it proposed in August, which included an equity raise of up to £410 million.
Premier’s acquisition of BP’s interests in the Andrew area and Shearwater field, which was to be paid for using the proceeds of the refinancing, won’t go ahead either.
Harbour chief executive Linda Cook will become CEO of the combined group.
Phil Kirk, current Chrysaor CEO, will take on the roles of group president and CEO Europe.
Premier CEO Tony Durrant will step down at year end.
Both companies said the deal would create a business with a “stable platform for future growth”.
The enlarged group will have production of more than 250,000 barrels per day and reserves of 717 million barrels of oil equivalent.
It will also take advantage of “substantial cost and tax synergies”, accelerating the use of Premier’s £3.15bn of UK tax losses.
Mr Kirk said: “Through this deal we will become the UK’s largest London-listed independent E&P, by all key metrics.
“With our combined organisation and operatorship of a large part of our now international portfolio, we will have the ability to deliver value safely, and play our part in the energy transition.”
Ms Cook said: “This transaction is the next step in Harbour’s aspiration to develop a new independent E&P company with global relevance.
“It significantly advances our leading position in the North Sea, where we will continue to re-invest, and expands our geographic footprint to Asia and Latin America.
“We are excited by the Premier assets in these regions and view them as the foundations upon which to build material portfolios and further diversify the company.”
Mr Durrant said: “There is significant industrial, commercial and financial logic to creating an independent oil and gas company of this size with a leading position in the UK North Sea.
“The transaction will also provide the combined group with a solid foundation from which to pursue a fully funded international growth strategy.”
Premier has interests in the UK, Brazil, Indonesia, Vietnam, the Falkland Islands and Mexico.
It was founded in 1934 in Scotland to pursue oil and gas exploration and production activities in Trinidad and acquired its first interest in the North Sea in 1971.
Premier’s top performer is the Catcher area, which came on stream in the central North Sea in December 2017.
Chrysaor, founded in 2007, made a splash in the North Sea in 2017 with its acquisition of a package of assets from Shell for £2.3bn ($3bn).
It expanded further last year through the purchase of ConocoPhillips for £2bn ($2.67bn).
In 2019, Chrysaor notched up revenues of £1.8bn and pre-tax profits of £350m.
In the first half of 2020, it had revenues of £955m, but swung to losses of £180m, dented by an impairment of £240m.
First-half production averaged 187,000 barrels per day at Chrysaor, whose reserves totalled 542m barrels at the end of last year.
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2020-10-06 06:20:37Z
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