Premier Oil to raise more cash

North Sea-focused oil and gas producer Premier Oil is tapping investors for a further $300 million (£229m) as it refinances its debts ahead of the acquisition of some of BP’S assets.

The group had already announced a $230m equity raise to fund the deal for the North Sea assets.

Alongside the proposed long-term refinancing of its business, Premier unveiled first-half results which revealed a $32m loss after tax before one off non-cash charges of $639m. That resulted in a $672m loss after tax for the six months to the end of June, compared with a profit after tax of $121m a year earlier.

The group, which also has interests in other countries including Indonesia and Vietnam, said the first half of the year saw “significant commodity price weakness and volatility”, driven by the collapse in global oil demand due to the Covid pandemic.

In June, Premier announced revised terms for its proposed acquisition of BP’S interests in the Andrew Area and the Shearwater field in the UK North Sea amid the turmoil.

Chief executive Tony Durrant said: “We have reduced our expenditure which, together with our hedging programme and the continued underlying performance of our assets, resulted in us generating free cash flow for the period, despite the collapse in commodity prices.

“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.”

Stuart Lamont, investment manager at Brewin Dolphin Aberdeen, said: “Premier is aiming to raise a further $300m of new equity to tackle its debt. While this may be dilutive for shareholders in the short term, it is also in the long-term interests of the company.”