Premier Oil has held talks on restructuring its debt with rival Chrysaor in a move that could pave the way for a tie-up between two of the largest UK oil and gas producers.
Premier said on Tuesday it had been talking with third parties including private-equity backed Chrysaor to refinance its debt as an alternative to an agreement reached with a group of creditors last month.
While the approach by Chrysaor did not “provide better outcomes for either its shareholders or creditors”, Premier said discussions on a potential transaction continued.
It is unusual for a company to be involved in talks to restructure another group’s debt unless it has an interest in a merger or acquisition of some of its assets.
The move, first reported by Bloomberg, signals a potential tussle between two of the North Sea’s largest producers, with Premier shareholders unwilling to sell despite its $2.9bn debt load and Chrysaor seeking to expand its North Sea footprint amid low energy prices.
Premier said it would stick with its proposal to raise $530m from shareholders as part of a refinancing despite the approach by Chrysaor, which snapped up the North Sea assets of ConocoPhillips last year in a $2.7bn deal.
Chrysaor, which was founded in 2007 and produces 200m barrels of oil a day, is not interested in acquiring Premier unless the debt is restructured, according to a person familiar with the matter.
Chrysaor declined to comment.
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Premier, whose share price has slid about 80 per cent this year, has been entangled in a debt dispute with its largest creditor, Asia Research and Capital Management, and in January revealed plans to spend $871m on acquisitions including BP’s North Sea assets.
A renegotiation of the terms of the BP deal in June helped ease tensions with the Hong Kong-based hedge fund but the group faces an uphill task shrinking its debt pile with crude prices at about $40 a barrel.
The proposal to refinance its debt, which 45 per cent of creditors have agreed to, remains subject to shareholder approval and a minimum equity raise of $325m, Premier said on Tuesday.
Chrysaor has risen to the top ranks of UK oil and gas producers, buying Shell’s North Sea assets in the region in 2017 along the way.