Premier Oil weighs cash call for Chevron North Sea fields
PREMIER OIL is considering a giant cash call to fund its bid for a package of oil and gas fields being sold by US major Chevron.
The company assured investors last week that it plans to keep a tight rein on spending as it drives its debts down. But according to The Sunday Times, it plans to turn to its shareholders for the $1.5bn deal.
Industry sources close to the deal confirmed that a rights issue or a share placing is one of the options Premier is considering.
Others include bringing in a project partner to help finance the bulk acquisition while Premier runs the fields as an operator. The company declined to comment.
Chief executive Tony Durrant told The Daily Telegraph last week that it is keeping an eye on deal activity in the North Sea basin as part of its “normal course of business”, but is focused on reducing its debt pile.
Premier is under pressure to balance the need to chip away at its £2.3bn debt with the chance to earn up to £4bn tax free in the UK North Sea. . The debtwracked oil firm is one of four vying for the North Sea fields in Chevron’s first sales round against well-funded rivals including private equity-backed Chrysaor, chemicals gian Ineos and Israeli conglomerate Delek.
All three of the companies are on the hunt for further North Sea assets after taking major stakes in recent years. Delek snapped up North Sea producer Ithaca almost two years ago and Chrysaor paid around $3.8bn for Shell’s assets around six months later.
The four-horse race could reduce to three this week as Ineos, owned by billionaire industrialist Jim Ratcliffe, inches towards a separate North Sea sales deal with ConocoPhillips almost two years since talks first began.
Ineos is understood to have considered the Chevron deal a “backstop option” in case the protracted talks with Conoco fell apart.
Ineos paid £300m for the exclusive right to sales talks with Chevron until Dec 15.
The deadline has since been extended to tomorrow as the pair struggle to agree on the price of the deal amid oil price volatility.