Premier Oil said on Friday it has renegotiated terms for its proposed acquisition of some of BP’s assets in the UK North Sea, Kallanish Energy reports.
Under the new “agreed in principle” deal, BP will cut the cash payable amount at completion to $210 million – down from the originally agreed $625 million.
The estimated abandonment obligations for the oil and gas assets were reduced to roughly $240 million from around $600 million (pre-tax). BP will retain 100% of the existing Shearwater abandonment costs and 50% of the Andrew Area abandonment costs.
The British oil major will also retain $300 million of estimated cash flows in the interim period from January 1, 2019. This amount is to be offset from the original consideration, which BP noted it has been kept, despite the more flexible terms to reflect market conditions.
The companies said they are committed to completing the transaction by September 30, 2020. But Premier Oil also noted, “there can be no certainty that the acquisitions will take place in accordance with these terms, nor that any legally binding agreement will be reached.”
Premier is working to convince creditors the transaction is value accretive and debt maturities should be extended. The oil company plans to issue new shares to fund the acquisition.
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