London-based independent Premier Oil announced on Tuesday it will merge with UK-based E&P firm Chrysaor, Kallanish Energy reports.
Premier will merger with Chrysoar through a “reverse takeover” announced on Tuesday with Chrysaor’s parent company, Harbour Energy. The newly-formed company will be the largest independent oil and gas company listed on the London Stock Exchange by product volume and financials, according to a statement by Premier.
A reverse takeover is the process whereby a privately-held company is acquired so that it may be taken public without being subjected to the standard listing process. The name of the newly-created company has not yet been disclosed.
Harbour Energy will be the largest shareholder with 39.02% of the newly-created combined company, while Chrysaor shareholders will own 77% of the overall combined group. Meanwhile, Premier stakeholders will own a 23% share and Premier shareholders will own just 5.45%.
The deal will see approximately $2.7 billion of total gross debt and certain hedging liabilities of Premier repaid and cancelled on completion.
GlobalData analyst Daniel Rogers said the Chrysaor-Premier merger is a win-win amid market challenges for both private equity backed and indebted listed E&P players.
“The two companies will create a dominant North Sea player with production of around 250,000 barrels of oil equivalent per day and growth opportunities such as the Tolmount gas development,” he added.
The merger will allow Chrysaor to expand its significant North Sea footprint with low-cost assets but will also gain exposure to producing assets in Indonesia and high-value development projects in South America. The combined entity will have a strengthened financial backing that should allow Premier’s pre-sanctioned growth developments to move forward.
Linda Cook, the current CEO of Harbour Energy, will become the chief executive of the new entity, while Phil Kirk, CEO of Chrysaor, will become president and chief executive of Europe.
“This transaction is the next step in Harbour’s aspiration to develop a new independent E&P company with global relevance. 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,” said Cook. “We are excited by the Premier assets in these regions and view them as the foundations upon which to build material portfolios and further diversify the company.”
Premier had previously been engaged in negotiations with supermajor bp to acquire some of its assets in the UK North Sea. Harbour Energy confirmed that this deal will be cancelled as a result of the merger.
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