Premier Oil today confirmed all of its restructuring’s substantial commercial terms have been agreed.
The Coordinating Committee of the RCF Group and representatives of the other Private Lenders (Term Loan, Schuldschein and USPP noteholders) all waved the terms through. The long form documentation will now be circulated to all lenders for their review and formal approval shortly.
A spokesperson said: “At that time, Premier expects to announce the full detail of the commercial terms which Premier anticipates will include equity warrants as part of the economics to lenders. Implementation of the refinancing will not otherwise be conditional upon the issue of new equity.
“Premier plans to enter into a lock up agreement in relation to the long form term sheet with Private Lenders during February. Revised refinancing documents will then be finalised along with the documentation for implementation of the refinancing via a court Scheme of Arrangement.
“Substantially the same economic terms will be offered to the retail bondholders as to the Private Lenders and these will also be disclosed at the same time as the terms being offered to the Private Lenders. Negotiations with the advisers to an ad hoc committee of the group’s convertible bondholders are ongoing.”
The firm recorded a turnover of $980million in 2016 – down on 2015’s $1.1billion.
Premier currently has an opex of $15.7 per barrel. Its net debt sits at $2.8billion and has a cash and undrawn facilities of around $600million.
It achieved record production of 71.4 kboepd, up 24% on 2015’s output.
Chief executive Tony Durrant said: “Premier achieved a strong operational performance in 2016, resulting in record production and the successful integration of the ex-E.ON portfolio.
“The Catcher project continues to progress well and will provide another step change in production, generating enhanced, tax-free cash flows for the Group. Our debt refinancing is nearing completion which, together with the improving commodity price environment, will enable us both to accelerate debt reduction and to progress future growth projects.”
A spokesperson added: “Production from the ex-E.ON portfolio exceeded expectations, averaging 16.3 kboepd over the 8 months from 31 April to 31 December 2016.
“The Huntington field averaged 10.8 kboepd during 2016, significantly above budget as a result of high uptime and strong reservoir performance. With further well management, Premier aims to maintain production from the field at these levels during 2017. Production from the Elgin-Franklin field increased during the year benefitting from an ongoing infill drilling programme, averaging 5.0 kboepd for the 8 months from 31 April to 31 December 2016 and 6.5 kboepd in Q4 2016.”
However, production from its Solan field was lower than expected. Premier blamed a “later start-up and poorer than expected reservoir performance” for limiting water injection and P2 production rates.
Its landmark Catcher development is expected to produce first oil later this year. Its total capex is now forecast at $1.6billion, 29% lower than the sanctioned estimate.
Premier has currently hedged 33% of its 2017 oil entitlement production through a mixture of swaps, options and fixed price term sales. Specifically, 12% of Premier’s 2017 oil production is covered by options with a floor price of $50.7/bbl and 21% of Premier’s 2017 oil production has been hedged through swaps and fixed price term sales at an average price of $50.8/bbl. To date, the group has also hedged around 40% of its 2017 UK gas entitlement production through fixed price term sales at an average price of 50p/therm.
