Premier Oil battling to hit deal deadline
Struggling oil explorer Premier is battling to hit its deadline of the end of the year to secure a full-scale financial restructuring package.
Premier is wrestling with the daunting task of finalising the £2bn deal with a team of 40 banks and advisers that has been pushed back from a previous deadline of September.
Premier said it is still on track to secure the deal before the end of 2016 though an industry source told City PM negotiations haven’t moved forward as “quickly as it had been hoped.”
Premier is weighed down with £2.6bn of debt which was taken on to finance the development of two significant North Sea oil projects, and both are expected to reach their peak production rates by the end of next year.
Premier’s debt pile dwarfs its market capitalisation of £314m and leaves the company unable to pass its financial covenant tests, which have been suspended while talks rumble on.
Premier has been hit by the fall in oil prices which tumbled below $27 per barrel at the start of this year and has wiped some 80 per cent from the company’s market value.
The oil price, which rallied to over $50 per barrel on hopes the Saudi Arabia led oil cartel Opec could agree to its first production cut in eight years, has dipped again recently.
Chances that Opec’s squabbling members will be able to reach a deal have appeared to fade since a preliminary agreement was announced in September.
Reports emerged last week that Saudi Arabia threatened to sharply raise oil output at an Opec meeting, causing the oil price to plunge on Friday to just over $45 per barrel.