Premier announced the below this morning.
Premier is pleased to announce the proposed acquisitions of the Andrew Area and Shearwater assets from BP for US$625 million, and an additional 25 per cent. interest in the Premier operated Tolmount Area from Dana for US$191 million plus contingent payments of up to US$55 million (together the “Acquisitions”). Premier is also pleased to announce the proposed extension of its existing credit facilities to 30 November 2023.
In addition, Premier today provides a separate trading update ahead of its 2019 Full Year Results including the proposed farm-out of part of its Sea Lion and Tuna assets.
Rationale and benefits of the Acquisitions
- Add c.23 kboepd of cash generative production in 2019 with development upside; acquired assets forecast to generate over US$1 billion of free cash flow to end 2023
- Add 82 mmboe of reserves and contingent resources at an implied cost of less than US$10/boe
- Contribute to rising Group production out to 2024 with pro forma 2019 production in excess of 100 kboepd
- Add low cost, low carbon emission assets with combined opex of less than US$20/boe
- Accelerate the use of Premier’s US$4.2bn tax losses
- Materially strengthen Premier’s financial position
- Additional free cash flow accelerates debt reduction
- Significantly reduce forward covenant leverage ratio towards 1x by 2022
- Extension of existing, non-amortising facilities to late 2023
Asset highlights
- Andrew Area (50%-100% interests in 5 fields, operatorship): currently producing c.18 kboepd (net to BP) with material near term upside through further development of the Andrew Lower Cretaceous reservoir
- Shearwater (27.5% interest): significant producing and infrastructure hub, adding 25 mmboe of reserves and resources with incremental investment opportunities and tariff income
- Tolmount (25% interest): consolidates interest in existing high return development, which is on schedule to deliver first gas by end-2020, with significant upside following recent drilling success at Tolmount East
The proposed Acquisitions will be funded via a US$500m equity raise (net of expenses) which has been fully underwritten on a standby basis, existing cash resources and, if required, an Acquisition Bridge Facility of US$300 million. Premier expects that the equity raise will include both a placing and rights issue component with any shares issued under the placing qualifying for the subsequent pre-emptive rights issue. It expects to confirm the structure and terms in Q1 2020 following consultation with major shareholders.
RBC Capital Markets and Jefferies are acting as Joint Corporate Brokers and Joint Underwriters.
RBC Capital Markets is also acting as Financial Adviser and Sponsor.
