Chrysaor has agreed to the reverse takeover of Premier Oil in an all-stock transaction that is set to create the largest UK-based oil and gas group as a result, as the sector continues its consolidation in the midst of a sharp downturn and future uncertainty.
UK - Jasmine Platform. Credit: Harbour Energy
The deal marks the end of the road for one of the oldest independent oil explorers. After years labouring under a mountain of debt Premier has finally bowed to pressure from creditors, with CEO Tony Durrant abandoning his plan to acquire some of BP’s North Sea assets and agreeing to step down.
The merger will create a stronger company, set to pump over 250,000 barrels of oil per day.
The deal will leave Chrysaor holding 77% of the newly combined group, with creditors to the financially floundering Premier taking the second-largest share. Less than 6% of the new company will be owned by Premier shareholders.
Premier’s market capitalisation was $180m at the close of trading on Monday, with gross debt of $2.7bn.
Like most businesses in the oil sector, Premier - which traces its history back to 1934 - has suffered as a result of the coronavirus pandemic. The company's plan to restructure its debt offered a glimpse of hope over the summer. However, the plans were blocked by company creditors who opted for the Chrysaor deal instead.
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