Premier North Sea Deals Cleared by Court

The Court of Session in Edinburgh has approved Premier Oil's plan to acquire $870mn in UK North Sea assets, the company said on April 29, after the deal was opposed by its main creditor, Hong Kong-based Asia Research and Capital Management (ARCM).

Premier struck deals in January to acquire BP's Andrew Area and Shearwater assets in the UK North Sea for $625mn, and take a 25% stake in the Tolmount field from South Korea's Dana Petroleum. However, ARCM said the move was too risky given Premier's debts, which stood at $2bn net at the end of December. It also took issue with Premier's plan to extend its debt maturities until 2023.

Premier secured backing from the majority of its creditors to proceed with the deals, but ARCM took the matter to court. 

"Premier notes that the single dissenting party has announced its intention to appeal the court’s judgment and, until that appeal process has concluded, the group is unable to register the court’s order with Companies House," the oil producer said in a statement.

If and when the court order is registered, Premier's transactions are still subject to a number of conditions, including shareholder approval and the completion of an equity issue, the oil company said.

"Premier continues to assess the viability of satisfying those conditions and therefore of completing the proposed transactions in light of the current market conditions," it said.

Following the court's verdict, ACRM reiterated that there was "no value" in pursuing the acquisitions, especially given the collapse in oil prices since the deals were announced. The producer will still need an equity raise of at least $350mn to close the purchases, the hedge fund said. ACRM holds more than 15% of Premier's debt and a short position of almost 17% of its stock. It plans to lodge its appeal with the Inner House of the Court of Session in the coming days.

The hearing on the case began in March 17 and finished a few days later, but Premier has waited until now for a ruling. Explaining her decision, judge Sarah Wolffe said there was "overwhelming" creditor support for the deals, and that it should be left to the market to decide whether Premier's plans are realised.

"If the equity raise does not generate sufficient new capital, the acquisitions cannot be funded," she said. "The first step is the equity raise. There is no better predictor of the success of the schemes in the market than the market itself."