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Message: Premier Oil soars on Oilexco deal
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Premier Oil soars on Oilexco deal |
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By John Harrington |
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Wed 25 Mar 2009 |
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The company is buying North Sea oil firm Oilexco North Sea Limited from the administrators for $505m. The acquisition is being part-funded by a £171m ($252m) rights issue on the basis of 4 new shares for every 9 shares held. The new shares are being issued at 485p, a 40% discount to the theoretical ex-rights price calculated on Tuesday’s closing price of 952p. The balance of the acquisition cost will be funded from existing cash resources and new credit facilities. The new credit facilities comprise a $175m 18-month bridge facility, a $225m 3-year revolving credit facility, plus $63m and £60m 3-year letter of credit facilities. The company said it expects to have around $385m of liquidity at the completion of the deal, expected some time in May 2009. Premier said the Oilexco acquisition will provide it with an additional 60 mmboe (millions of barrels of oil equivalent) of proven and probable (2P) reserves and contingent resources, and unrisked reserve potential of up to 385 mmboe across 15 exploration prospects. Premier’s current production should be boosted by around 13,700 barrels of oil equivalent per day (boepd) in 2009, the company said. Even ignoring the value of the significant tax losses Premier will take on board, the acquisition price is equivalent to $8.50 a barrel. The acquisition price will disappoint Oilexco’s unsecured creditors, however. According to the Aberdeen Press & Journal, Oilexco’s administrator, Ernst & Young, told creditors at a meeting in Aberdeen on 24 March that it had set a threshold of £586m, below which unsecured creditors would have little chance of getting any money back. Oilexco’s secured and unsecured debts total more than £600m, the newspaper reported. In its results announcement Premier Oil said profit before tax soared to £277.6m in 2008 from £147m the year before, while post-tax profits more than doubled to £98.3m from £39m. Sales revenue climbed to £655.2m from £578.2m in 2007. Production increased to 36,500 boepd from 35,800 boepd the year before. Reserves grew by 7.5% to 228 mmboe from 212 mmboe, while reserves plus resources climbed to 382 mmboe from 369 mmboe. ‘Despite volatile markets the group is extremely well placed to fund the forthcoming capital expenditures and deliver medium-term growth,' the company said. |
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