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Chrysaor’s Reverse Takeover of Premier Oil To Create Largest North Sea Independent

London-based Premier Oil announced this week that it agreed to a reverse takeover with fellow UK offshore exploration and production company Chrysaor. Upon closing, Chrysaor will become the largest independent producer in the North Sea with 254,000 BOED—more than one-eighth of total UK output.

The deal will give privately owned Chrysaor a 77% stake in the combined company which is expected to generate revenues of $1.76 billion in the second half of this year. Holding the remaining shares will be Houston-based Harbour Energy, an upstream investment subsidiary of private-equity group EIG Global Energy Partners.

Chrysaor’s portfolio will expand beyond the UK as a result of the merger. With Harbour’s and Premier’s existing assets included, the company will hold claim to interests offshore Mexico, Brazil, Vietnam, Indonesia, and Norway.

Linda Cook, the current CEO of Harbour, will assume the top position at Chrysaor. Cook previously spent 29 years with Shell where she once served as the CEO of the Dutch supermajor’s gas and power division. As the takes on her newest role she will become the second female CEO of a London-listed oil and gas company.

“This transaction is the next step in Harbour’s aspiration to develop a new independent E&P company with global relevance,” said Cook in a company release. “It significantly advances our leading position in the North Sea, where we will continue to re-invest, and expands our geographic footprint to Asia and Latin America.”

Phil Kirk, the current CEO of Chrysaor, will become president of the combined group and the chief executive of European operations. Kirk founded Chrysaor in 2007 and has led the company since.

Chrysaor’s growth trajectory was bolstered last year when it acquired two UK-based subsidiaries from ConocoPhillips in a deal valued at more than $2.6 billion. The transaction marked ConocoPhillips’s exit from the North Sea where it had operated for more than 50 years. Chrysaor’s production base swelled by 72,000 BOED to 185,000 BOED as a result of the deal, according to company reports from 2019.   

Key to the latest transaction is the repayment or cancellation of Premier’s debt load and total liabilities of more than $2.7 billion. Creditors will be paid $1.23 billion in cash—about 61 cents on the dollar for monies owed.

Premier’s outstanding credit of $400 million is to be refinanced under the terms of the deal. Existing creditors will also be given shares in the merged company or a cash alternative not to exceed $175 million. These terms would give Premier’s existing shareholders about 5.5% of the new company.

Premier was founded in Scotland in 1934 but like many of its global peers, the offshore producer suffered major losses since the onset of the COVID-19 pandemic and a Russia-Saudi oil price war earlier this year. The shock to demand contributed to an 80% drop in Premier’s market value over the past year.

In September, Premier said it had engaged with “a number of third parties” that included Chrysaor about alternative forms of financing. However, at the time, the company said its preferred route was to secure long-term refinancing from a subset of existing creditors and an equity raise of $325 million.

Chrysaor’s Reverse Takeover of Premier Oil To Create Largest North Sea Independent

06 October 2020

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