Premier Oil sold to US North Sea operator Chrysaor for $3 billion in deal to pay off creditors

US parent company's boss Linda Cook to become a rare female oil company CEO

Oil rig platforms being stacked up in the Cromarty Firth, Scotland, as oil prices continue to decline

6 October 2020

Premier Oil today struck a deal with the North Sea’s biggest operator to merge in a deal that will see shareholders in the group massively diluted but will fix the company’s vast debt problem.

The struggling oil explorer is to be bought for nearly $3 billion by privately owned Chrysaor in a move that will see a woman take over as chief executive of a major stock market quoted energy group for the first time.

Linda Cook is chief executive of Chrysaor’s owner, the US private equity backed business, Harbour. The former Shell executive will move to London to head up the group.

The deal will see Chrysaor reverse into Premier and combine the two companies’ operations.

It will effectively pay out Premier’s $2.7 billion debt holders and creates a London-based business producing 250,000 barrels of oil a day.

While the deal is complex, it is thought effectively to value Premier’s equity at about $280 million against $180 million before the deal was announced.

Creditors, who have long been trying to find a way to get back the money they lent the struggling Premier, will get a cash payment of $1.23 billion plus shares in the combined business.

Premier share and bondholders will end up owning up to 23% of the combined group, making it a reverse takeover of the listed company. Premier shareholders will end up with 5.45% of the enlarged business.

Premier fought a long running battle with one of its bondholders, the Hong Kong hedge fund ARCM, for much of last year. ARCM, along with six others holding 45% of the company’s debt, have agreed to today’s deal already.

A further 50 or so banks and funds holding the remainder of the debt are still to approve it.

Chrysaor has about 200,000 barrels a day coming out of the North Sea at the moment and will add in Premier's smaller production plus its overseas reserves.

Tony Durrant, Premier chief executive, told the Standard: "This is a sensible industrial and financial fit that takes away the risk of being a small company. Our shareholders have lots to look forward to: Chrysaor has lots of current production and we have future resources including internationally. This is a much better vehicle for our shareholders to invest in."

Cook said of the deal: "It significantly advances our leading position in the North Sea, where we will continue to reinvest, 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."

Harbour is a US business set up by fund manager EIG to build oil businesses around the world. It set up Chrysaor as its North Sea player in 2007 but built the business most rapidly through two big acquisitions in 2017 and 2019, buying big North Sea operations from Shell and ConocoPhillips for more than $6 billion combined.

Chrysaor employs around 800 staff onshore in Aberdeen, 400 offshore. It has a further 400 contractors plus around 50 head office staff in London.

Phil Kirk, Chrysaor's chief executive, will move to become president of the combined group and chief executive of Europe.

He said: "This is a set of assets we like and it brought us the potential of a stock market listing. It was at times a difficult situation but we have a big group of creditors supporting us and the Premier board has approved it.

"This is going to create a business in the upper reaches of the FTSE-250, knocking on the FTSE-100. The combined group will be in a better position. We have the ability to invest and think about paying a dividend."

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Premier Oil sold to US North Sea operator Chrysaor for $3 billion in deal to pay off creditors

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