Premier will be in a position to benefit from rising near-term production and a strengthening balance sheet, as oil prices are expected to recover, according to chief executive Tony Durrant
() has reached agreement with a group of its lenders for a proposed US$2.9bn refinancing.
It extends Premier’s maturities from May 2021 to March 2025, and, sets a harmonised interest rate of 8.34% across the company’s cash credit facilities.
The agreement also resets Premier’s debt covenant profile to provide sufficient headroom for a prolonged lower commodity price environment.
At the same time, Premier plans to raise up to US$530mln of new equity funding of which US$230mln will fund the North Sea acquisitions from BP and a further US$300mln to pay down debt.
The debt refinancing agreement is conditional upon Premier securing the equity funding.
Creditors accounting for more than 45% of Premier’s debt have backed the refinancing plan, and they will take exchange a portion of the debt into equity. The equity raise meanwhile requires approved by shareholders.
“The BP acquisitions and our proposed long-term refinancing will position Premier to benefit from materially rising near-term production, additional free cash flow generation and a strengthening balance sheet, against a backdrop of a recovering oil price,” said Tony Durrant, Premier chief executive.
Interim financial results
Premier also reported its half-year results this morning, with production, as expected, down at 67,300 barrels oil equivalent per day (boepd) versus 84,100 boepd in first half of 2019, and, operating cash flow reduced to US$324mln from US$545mln in the same period.
The company reported a US$32mln loss, before US$639mln of non-cash charges marked a loss of US$672mln.
Premier gave guidance for 65,000 to 70,000 boepd for 2020, and, said it is forecast to be free cash flow positive for the year.