TIDMPMO TIDMTTM TIDMTTM
RNS Number : 2102B
Premier Oil PLC
06 October 2020
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN
OFFER OF SECURITIES IN ANY JURISDICTION.
THIS IS AN ANNOUNCEMENT AND NOT A CIRCULAR OR PROSPECTUS OR
EQUIVALENT DOCUMENT AND INVESTORS AND PROSPECTIVE INVESTORS SHOULD
NOT MAKE ANY INVESTMENT DECISION ON THE BASIS OF ITS CONTENTS. A
CIRCULAR AND PROSPECTUS IN RELATION TO THE TRANSACTION DESCRIBED IN
THIS ANNOUNCEMENT WILL EACH BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Premier Oil plc ("Premier") and Harbour Energy ("Harbour")
Proposed merger of Premier and Chrysaor Holdings Limited
("Chrysaor") and the reorganisation of Premier's existing finance
arrangements
6 October 2020
Premier and Harbour are pleased to announce that they have
reached agreement with Harbour's UK operating company Chrysaor,
regarding a proposed all share merger between Premier and Chrysaor
(the " Combined Group ") and the reorganisation of Premier's
existing debt and cross-currency swaps (together, the " Transaction
").
The Transaction will create the largest independent oil and gas
company listed on the London Stock Exchange with combined
production of over 250 kboepd (as at 30 June 2020). In addition,
the Combined Group will have a strong balance sheet and significant
international growth opportunities.
Key highlights
-- Premier to merge with Chrysaor through a reverse takeover;
London listing retained
-- The Transaction is expected to result in Premier's
stakeholders owning up to 23 per cent of the Combined Group and
Harbour and other Chrysaor shareholders owning at least 77 per
cent
- Premier's shareholders are expected to own up to 5.45 per cent ([1]) of the Combined Group
- Chrysaor's largest shareholder, Harbour, is expected to own up
to 39.02 (1) per cent of the Combined Group
-- Premier's approximately US$2.7 billion of total gross debt
and certain hedging liabilities will be repaid and cancelled on
completion
- A cash payment of US$1.23 (2) billion will be made to
financial creditors of Premier and its subsidiaries (together, the
" Premier Group ") and Premier Group's cross-currency hedge
counterparties (the " Existing Creditors "); Premier's
approximately US$400million of letters of credit will be
refinanced; Existing Creditors will also receive shares in the
Combined Group
-- The Combined Group's Board of directors will comprise 11
directors including six independent non-executive directors and
three executive directors including Linda Z. Cook (currently CEO of
Harbour) who will be CEO of the Combined Group and Phil Kirk
(currently CEO of Chrysaor) who will be President of the Combined
Group and CEO Europe; the two other non-executive directors will be
appointed by Harbour
-- The Transaction is subject to regulatory approvals and
approval by Premier's shareholders and the Existing Creditors
Rationale and benefits of the Transaction
The Boards of Directors of Premier and Harbour believe the
Transaction will:
-- Bring together two complementary businesses to create the
largest London-listed independent oil and gas company by production
and reserves
- Combined production as at 30 June 2020 of over 250 kboepd and
combined 2P reserves of 717 mmboe as at 31 December 2019
- Combined 2020 H1 revenue of US$1.76 billion and H1 EBITDAX of US$1.27 billion
- Competitive operating costs of US$10.5/boe in H1 2020
- Sector leading strategies to reduce the carbon footprint of their operations
-- Result in a Combined Group with significant scale and
diversification, through the combination of material operated and
non-operated cash generative production hubs in the UK North
Sea
-- Create a business with a stable platform for future growth
and the ability to fund and realise value from its development
portfolio and international exploration projects
-- Transform Premier's financial position, delivering a Combined
Group with a strong and sustainable financing structure with
resilience to compete in a lower commodity price environment;
anticipated combined accounting net debt (excluding Letters of
Credit) of approximately US$3.2 billion on completion
-- Create substantial cost and tax synergies, accelerating the
use of Premier's c. US$4.1 billion of UK tax losses and unlocking
significant value for shareholders
-- Create a combined business with the potential to offer a
meaningful dividend for shareholders over time
Conditions to closing
The Transaction is subject, amongst other things, to regulatory,
shareholder and Existing Creditors' approval.
Since the Transaction constitutes a reverse takeover for the
purposes of the Listing Rules, Premier will need to seek
shareholder approval and re-admission of its ordinary shares upon
completion to the Official List of the FCA and to trading on the
main market of the London Stock Exchange. Premier will in due
course send a prospectus and circular to its shareholders convening
a general meeting to approve the Transaction.
Premier's Board intends to provide its unanimous and
unconditional recommendation to Premier's shareholders to vote in
favour of the Transaction, as the Premier directors intend to do in
respect of their own beneficial holdings of Premier's shares,
representing approximately 0.12 per cent of the existing share
capital of Premier as at 5 October 2020, being the last practicable
date prior to publication of this announcement.
Roy Franklin, Chairman of Premier, commented:
"The Board intends to recommend unanimously this transaction to
shareholders as being in the best interests of shareholders and the
company. This will mark a new and exciting chapter in Premier's
history."
Tony Durrant, CEO of Premier, commented:
"There is significant industrial, commercial and financial logic
to creating an independent oil and gas company of this size with a
leading position in the UK North Sea. The transaction will also
provide the Combined Group with a solid foundation from which to
pursue a fully funded international growth strategy."
Linda Cook, CEO of Harbour, commented:
"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. 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."
Phil Kirk, CEO of Chrysaor, commented:
"Through this deal we will become the UK's largest London-listed
independent E&P, by all key metrics. With our combined
organisation and operatorship of a large part of our now
international portfolio, we will have the ability to deliver value
safely, and play our part in the energy transition."
A live audio webcast and conference call for analysts and
investors will be held today at 09:30am (BST):
Webcast access: www.premier-oil.com
Dial-in details are: +44 (0)20 3936 2999. Access code:
348571
This summary should be read in conjunction with the full text of
this announcement below.
Premier enquiries:
RBC Capital Markets (Financial Adviser and Joint Corporate
Broker) 020 7653 4000
Martin Copeland
Matthew Coakes
Paul Betts
PJT Partners (UK) Ltd (Debt Financial Adviser) 020 3650 1100
Martin Gudgeon
Jamie Bolden
Jefferies (Joint Corporate Broker) 020 7029 8000
Tony White
Will Soutar
Camarco (Advisers to Premier) 020 3757 4983
Billy Clegg
Georgia Edmonds
Harbour / Chrysaor enquiries:
Barclays (Joint Financial Adviser) 0207 623 2323
Michael Powell
Rob Mayhew
BMO Capital Markets (Joint Financial Adviser) 020 7236 1010
Jeremy Low
Tom Hughes
Brunswick Group (Advisers to Chrysaor) (UK & International
Media) 020 7404 5959
Patrick Handley
Will Medvei
Sard Verbinnen & Co. (Advisers to Harbour Energy and EIG
Global Energy Partners (North American Media)
Kelly Kimberly +1 212 687 8080
Brandon Messina
The information contained within this announcement is deemed by
Premier to constitute inside information as stipulated under the
Market Abuse Regulation. By the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain. The person responsible
for arranging for the release of this announcement on behalf of
Premier is Andy Gibb (General Counsel).
LEI: 213800YPC42DYBKVPF97
BACKGROUND
Background to the Transaction for Premier
On 20 August 2020, Premier announced it had agreed with a subset
of the Existing Creditors a heads of terms for a long term
refinancing of the Premier Group's debt facilities, which included
an equity raise of up to US$530 million (the "proposed refinancing
"). The proposed refinancing remained subject to Existing Creditor
and shareholder approval as well as to total take-up under the
equity raise being not less than US$325 million. On 15 September
2020, Premier confirmed that, in parallel to seeking Existing
Creditor consent for the proposed refinancing, it was in
discussions with a number of third parties, including Chrysaor,
regarding alternative long term refinancing solutions.
Premier's Board believes that the Transaction is of broadly
comparable value to shareholders as compared to the proposed
refinancing but, taking into account today's challenging
macroeconomic conditions, has greater execution certainty.
As a result, Premier will not be proceeding with the proposed
refinancing or the acquisitions of assets from BP previously
announced which were to be financed from the proceeds of the
proposed refinancing.
DETAILS OF THE TRANSACTION
Transaction Terms
Under the terms of the Transaction, Premier will acquire
Chrysaor in return for the issuance of new Premier shares and
Premier Group's approximately US$2.7 billion of total gross debt
and cross-currency swaps will be repaid and cancelled.
Upon completion of the Transaction, the Existing Creditors will
receive a cash payment of US$1.23 ([2]) billion in satisfaction of
part of the Premier Group's existing debt and cross-currency swaps
and Premier will issue new shares to the Existing Creditors to
satisfy the balance of the Premier Group's existing debt and
cross-currency swaps.
The cash payment will be funded through a US$4.5 billion reserve
based lending facility (" RBL Facility ") that is being fully
underwritten by Bank of Montreal (London Branch), BNP Paribas, DNB
(UK) Limited and Lloyds Bank plc, and existing Premier cash. The
cash component will be subject to adjustments to reflect drawdowns
and repayments of the Combined Group's debt from 30 June 2020 to
completion of the Transaction.
The Premier Group's outstanding letters of credit of
approximately US$400 million will also be refinanced. This,
together with the US$1.23 billion cash payment, represents
approximately 61 cents on the dollar recovery for Existing
Creditors (on average across Existing Creditors). In addition,
Existing Creditors will receive (i) new shares in the Combined
Group and/or (ii) a cash alternative which is capped at a maximum
of US$175 million (the " Partial Cash Alternative "). It is
expected that Existing Creditors will be able to subscribe in cash
at a pre agreed price for those new shares in the Combined Group
which would have been issued to Existing Creditors if they had not
elected to take the partial cash alternative (the " Top-Up Election
").
The combination of these provisions would result in a total
recovery of approximately 75 cents on the dollar (on average across
Existing Creditors) in cash at completion of the Transaction for
those electing for the partial cash alternative. For those Existing
Creditors who elect to take new shares they would have a base cash
recovery of approximately 61 cents on the dollar (on average across
Existing Creditors) with the additional potential value of those
shares based on the future valuation of the Combined Group.
Immediately following completion of the Transaction, and
assuming full take up by Existing Creditors of the partial cash
alternative and assuming no Top-Up Election, the shares in the
Combined Group would be held as follows:
-- Harbour and other Chrysaor shareholders: 83.92 per cent (of
which Harbour 39.02 per cent)
-- Premier stakeholders: 16.08 per cent (comprising Premier
shareholders 5.45 per cent, Existing Creditors 10.63 per cent)
Immediately following completion of the Transaction, and
assuming no take up by Existing Creditors of the partial cash
alternative, the shares in the Combined Group would be held as
follows:
-- Harbour and other Chrysaor shareholders: 77 per cent (of
which Harbour 35.80 per cent)
-- Premier's stakeholders: 23 per cent (comprising Premier
shareholders 5 per cent, Existing Creditors 18 per cent)
Harbour Whitewash Waiver
It is anticipated that Harbour as the largest shareholder of
Chrysaor, together with its concert parties, as determined by the
Takeover Panel, will hold between 36.7 per cent of the shares of
the Combined Group and 40.0 per cent of the shares of the Combined
Group (depending on take up by Existing Creditors of the partial
cash alternative and assuming no subscription by the Existing
Creditors for the Top-Up Election). As a consequence, since this
exceeds the 30 per cent trigger for a mandatory offer under the
Takeover Code, the Transaction is also conditional on a Rule 9
whitewash waiver from the Takeover Panel in order to disapply
mandatory offer requirements. This whitewash waiver will require
approval by Premier's independent shareholders at the general
meeting to be held in due course.
Harbour's shares will be subject to a 12 month lock-up from
completion and a further 365 day orderly marketing covenant. Shares
held by affiliates of EIG Global Energy Partners' ("EIG") and
certain Chrysaor minority shareholders will be subject to a 6 month
lock-up from completion and an orderly marketing covenant. Due to
the size of its shareholding in the Combined Group, Harbour will
enter into a relationship agreement on customary terms with Premier
on completion.
Merger Agreement - Key Termination Provisions
The merger agreement that will give effect to the Transaction
can be terminated in a number of limited circumstances. Premier can
terminate in certain circumstances, including where the RBL
Facility ceases to be available to be drawn down on completion or
where Premier is unable to make the working capital statement
required in the prospectus and circular that are being prepared in
connection with the Transaction. Chrysaor or the Harbour parties
can terminate the merger agreement if the Premier Board changes or
withdraws its recommendation, if Premier shareholders do not
approve the Transaction or if Premier fails to publish the
prospectus or circular once it has been approved by the FCA. Both
parties have customary termination rights for material breaches of
warranties and interim covenants and in circumstances where (i) a
third party offer is made under the Takeover Code and is
recommended by the Premier Board; (ii) the Combined Group is found
not to be eligible for re-admission to the premium segment of the
Official List under the Listing Rules or the prospectus or circular
is not approved by the FCA for reasons relating primarily to
Chrysaor and the Harbour parties, including due to a projected
shortfall in the Combined Group's working capital position after
completion; (iii) Harbour does not commit to making a Rule 9 offer
for Premier shares under the Takeover Code, if required to make
such offer; and (iv) the creditor lock-up arrangements terminate,
as described further below, in relation to the support letter.
If the Transaction is terminated, break fees may become payable
by Premier or Chrysaor. In Premier's case the limit of any break
fee payable is approximately US$1.8 million. The break fee amounts
payable by Chrysaor vary depending on the materiality of the
termination event. Chrysaor will be required to pay a break fee of
US$100 million if the Transaction is terminated in circumstances
where (i) the Transaction fails to complete because the RBL
Facility is not available, or any of Chrysaor or the Harbour
parties is in breach of its completion obligation; (ii) Harbour
does not commit to making a Rule 9 offer for Premier shares under
the Takeover Code, if required by the Takeover Code to make such
offer; (iii) Chrysaor is in material breach of its warranties or
interim covenants given under the merger agreement; or (iv) subject
to certain exceptions, Premier is unable to make the working
capital statement required in the prospectus and circular. A lower
break fee of US$20 million will be payable by Chrysaor (i) if
Premier shares are ineligible for re-admission to listing on the
premium segment of the Official List for reasons related to
Chrysaor or its shareholders, for any reason other than in relation
to working capital requirements; or (ii) in certain circumstances
where a party to the creditor lock-up arrangements (other than
Chrysaor or a Harbour party) becomes entitled to terminate such
arrangements.
Pursuant to the terms of the merger agreement, the Premier
directors have the right to amend or withdraw their recommendation
of the Transaction at any time if they conclude that such course of
action is required as a result of the statutory or fiduciary duties
to which the Premier Directors are subject.
Merger Agreement - Key Conditions to the Transaction
The merger agreement between Premier, Harbour, funds managed by
EIG and Chrysaor will initially be suspended through an escrow
arrangement and will take effect following the requisite thresholds
of Existing Creditors having entered into the support letter. The
Transaction is also conditional on, among other things:
-- Premier shareholder approval at a general meeting convened
pursuant to an FCA-approved prospectus and circular
-- a whitewash waiver granted by the Takeover Panel to be
approved by Premier's independent shareholders
-- FCA and London Stock Exchange approval of the admission of
the new shares and re-admission of the existing shares
-- satisfaction of regulatory approvals in the UK, Falkland
Islands and Norway and antitrust approvals (EU, Vietnam and
Mexico)
-- Existing Creditor approval through Court-convened
restructuring plans
-- no material breach of warranties or covenants having occurred
prior to completion
Existing Creditors' approval
Premier is seeking consent from Existing Creditors for the
Transaction and, in order to support implementation of the
Transaction, an extension of the existing maturity date of its debt
facilities from May 2021 to 31 March 2022 by means of
Court-approved restructuring plans. Existing Creditors (other than
Premier's retail bondholders) are being asked to enter into a
support letter pursuant to which, among other things, they commit
to approve the restructuring plans and agree to waive the Premier
Group's financial covenants. The support letter will remain in
force until the Transaction completes, subject to certain limited
termination rights.
As at the date of this announcement, over 43 per cent by value
of the Existing Creditors have entered into the support letter. The
support letter will terminate if the requisite thresholds of
Existing Creditors, being in broad terms 75 per cent of the
Existing Creditors, have not entered into it by 3 November 2020 (or
such later date as may be agreed). Pending these thresholds being
achieved, sufficient Existing Creditors have provided forbearances
in respect of any defaults that may be argued to arise under
Premier's debt facilities by virtue of steps taken in connection
with the Transaction.
Shareholder approvals
As indicated above, the Transaction will be conditional on
approval by Premier's shareholders. Premier currently anticipates
posting the prospectus and shareholder circular to convene a
shareholder meeting to approve the Transaction before the end of
the year. At that meeting, shareholders will be asked to approve
resolutions (i) consenting to the issue of more than 30 per cent of
the shares in the Combined Group to Harbour and its concert parties
without triggering a mandatory offer for the purposes of the
Takeover Code (a Takeover Code "whitewash"); (ii) approving the
Transaction for the purposes of the Listing Rules; (iii) approving
the issue of new Premier shares to Chrysaor shareholders and
Existing Creditors, as described above; (iv) adopting new standing
authorities to issue shares and disapply statutory pre-emption
rights reflecting the enlarged share capital of the Premier; and
(v) certain other matters required to effect the Transaction.
Board and Management
From completion of the Transaction it is anticipated that:
-- the Board of Directors of the Combined Group will comprise 11
directors including six independent non-executive directors, 2
non-executive directors to be appointed by Harbour and 3 executive
directors
-- Linda Cook (currently CEO of Harbour) will be CEO of the
Combined Group and Phil Kirk (currently CEO of Chrysaor) will be
President of the Combined Group and CEO Europe
In addition, Tony Durrant (currently CEO of Premier) will step
down from the Premier Group at year end.
Further information on the composition of the board of directors
of the Combined Group, and other senior management appointments,
will be announced in due course.
Board recommendation and Directors' Irrevocable Undertakings
The directors of Premier have determined that the Transaction is
in the best interests of Premier based on a number of factors and
intend unanimously and unconditionally to recommend that
shareholders vote in favour of the resolutions to be proposed by
Premier at the shareholder meeting to be held to approve the
Transaction.
The directors have irrevocably undertaken that they will vote in
favour of the relevant resolutions required to implement the
Transaction at the shareholder meeting in respect of the their own
beneficial holdings of Premier shares, representing approximately
0.12 per cent of the existing share capital of Premier as at 5
October 2020, being the last practicable date prior to publication
of this announcement.
NOTES TO EDITORS
Information on Premier
Premier is an independent exploration and production company
with significant oil and gas interests in the UK, Indonesia,
Vietnam, the Falkland Islands and Mexico. The Premier Group also
has exploration interests in Brazil. The Premier Group was founded
in 1934 in Scotland to pursue oil and gas exploration and
production activities in Trinidad. The Premier Group acquired its
first interest in the North Sea in 1971. It has since expanded its
presence on the UK Continental Shelf (" UKCS ") through a series of
value accretive acquisitions and successful exploration.
Premier's portfolio consists of: (i) oil and gas fields which
are already producing; (ii) discovered fields not yet producing but
which are undergoing development planning or execution; and (iii)
licences to explore for new oil and gas fields in prospective
areas.
As at 31 December 2019, the Premier Group had 2P reserves of
174.7 mmboe and 2C resources of 672.1 mmboe, giving rise to a
reserves and resource base of 846.8 mmboe. Production for the half
year ended 30 June 2020 averaged 67.3 kboepd and is forecast by the
Premier Group to average between 65 kboepd and 70 kboepd for the
year ending 31 December 2020.
Information on Harbour and EIG Global Energy Partners
Harbour is a global energy investor founded by EIG with the
objective of building a portfolio of successful, long term energy
businesses, with a focus on opportunities outside the United
States. EIG specialises in private investments in energy and
energy--related infrastructure on a global basis and as at 30 June
2020 had assets under management of US$22.9 billion. Since 1982,
EIG has invested over US$34.2 billion through more than 363
projects across 36 countries on six continents.
Further information on EIG and Harbour can be found at
www.eigpartners.com and www.harbourenergy.com
Information on Chrysaor
Chrysaor is an independent UK North Sea oil and gas exploration
and production company with assets located primarily on the UKCS.
Since its inception in 2007, it has grown organically and through
acquisitions. This includes the acquisition of certain UK oil and
gas assets from Shell for US$3 billion in 2017 and ConocoPhillips
for US$2.675 billion in 2019.
Chrysaor's portfolio consists of high quality, long--life oil
and gas assets. It is operator of the Greater Britannia Area, the
J-Area and the Armada, Everest and Lomond production hubs and also
has non-operated interests in some of the UK's largest producing
fields, including Elgin-Franklin (where Premier is also a partner),
Buzzard and Clair.
During the first half of 2020, production from Chrysaor's assets
averaged 187 kboepd. The audited accounts of Chrysaor for the
financial year ended 31 December 2019 state that the gross assets
of Chrysaor at 31 December 2019 and profits of Chrysaor for the
financial year ended 31 December 2019 were US$11.3 billion and
US$219 million respectively.
Additional information on Chrysaor and its subsidiaries
(together the "Chrysaor Group") can be found below and at
www.chrysaor.com
Further information on Chrysaor
Production assets
The following table provides a summary of the Chrysaor Group's
portfolio of producing fields, all of which are located in the
UKCS, as at 30 June 2020.
Asset Field Operator Field type Working interest
---------------------------------- ---------------- ---------- ------------ -----------------
Armada Area Drake Chrysaor Oil/Gas 100%
Fleming Chrysaor Gas 100%
Hawkins Chrysaor Oil/Gas 100%
Maria Chrysaor Oil 100%
Seymour Chrysaor Oil/Gas 100%
---------------- ---------- ----------------------------------------------- -----------------
Beryl Area Beryl Apache Oil/Gas 39.445%
Buckland Apache Oil/Gas 37.472%
Callater Apache Oil/Gas 45%
Ness Apache Oil/Gas 39.445%
Nevis Apache Oil/Gas 42.820%
Skene Apache Gas 34.044%
Storr Apache Oil/Gas 41%
---------------- ---------- ----------------------------------------------- -----------------
Britannia Area Alder Ithaca Oil/Gas 26.320%
Britannia Chrysaor Oil/Gas 58.650%
Brodgar Chrysaor Oil/Gas 87.5%
Callanish Chrysaor Oil/Gas 83.5%
Enochdhu Chrysaor Oil/Gas 50%
---------------- ---------- ----------------------------------------------- -----------------
Buzzard Field Buzzard Field CNOOC Oil/Gas 21.733%
---------------------------------- ---------------- ---------- ------------ -----------------
Clair Field Clair Field BP Oil/Gas 7.503%
East Irish Sea Area Dalton Chrysaor Gas 100%
Millom Chrysaor Gas 100%
Calder Chrysaor Gas 100%
---------------- ---------- ----------------------------------------------- -----------------
Elgin-Franklin Area Elgin-Franklin Total Oil/Gas 14.110%
Glenelg Total Gas 14.7%
---------------- ---------- ----------------------------------------------- -----------------
Everest Area Erskine Ithaca Gas 32%
Everest Chrysaor Gas 100%
Lomond Chrysaor Gas 100%
---------------- ---------- ----------------------------------------------- -----------------
Galleon Field - Shell Gas 8.4%
---------------------------------- ---------------- ---------- ------------ -----------------
J-Area Jade Chrysaor Oil/Gas 67.5%
Jasmine Chrysaor Oil/Gas 67%
Joanne Chrysaor Oil/Gas 67%
Judy Chrysaor Oil/Gas 67%
---------------- ---------- ----------------------------------------------- -----------------
Schiehallion Field - BP Oil/Gas 10%
---------------------------------- ---------------- ---------- ------------ -----------------
(1) Operated by Chrysaor and managed under contract by Spirit Energy.
The following table sets forth certain information with respect
to the Chrysaor Group's historical production volumes and realised
pricing (which reflects the impact of derivatives) for the years
ended 31 December 2017, 2018 and 2019 and the six months ended 30
June 2019 and 2020.
Year ended 31 December Six months ended 30 June
--------------------------- ---------------------------
2017 ([3]) 2018 2019 2019 2020
-------------------------------------- ------------ ----- ------ -------- -----------------
Production/Sales:
Sales Volume (kboepd) 99 105 137 123 187
Average realised oil price (US$/bbl) 59.5 61.1 67. 9 69.1 63.9
Av. realised gas price (pence/therm) 43 43 36 39 31
Operating Costs (US$/boe) 15.0 12.6 11.5 11.5 10.2
-------------------------------------- ------------ ----- ------ -------- -----------------
Operations
Chrysaor operates five complexes in the Central North Sea, which
are run out of three business units or hubs; the Armada, Everest
Lomond and Erskine fields comprise one hub and the J-Area and
Greater Britannia Area the other two. Chrysaor has interests in 33
producing fields located primarily in the Central North Sea area of
the UKCS and 14 undeveloped discoveries either in proximity to its
existing infrastructure or for which it has entered into farm-in
agreements.
Chrysaor's strategy is to execute hub-led growth targeting
acquisitions of nearby producing fields with associated undeveloped
hydrocarbon resources primarily in the UKCS. Its focus is to grow
its free cash flow and monetize the reserves within its asset
portfolio, appraise and develop existing oil and gas discoveries,
invest in production enhancement opportunities and acquire
strategic assets.
Chrysaor aims to grow its future cash flows and reserves through
continued investment in the various development opportunities in
its existing portfolio, including Talbot, Beryl Tertiary and a
number of identified infill and compression projects to increase
and improve existing recoveries. Chrysaor also intends to continue
leveraging the value of its infrastructure by developing existing
discoveries in the catchment area of its facilities that would
otherwise be uneconomical without the ability to utilize this
infrastructure. Chrysaor also seeks to enhance production and
access additional reserves through continued investment in low cost
infill drilling opportunities across its portfolio.
Armada, Everest, Lomond and Erskine ("AELE")
Chrysaor holds a 100 per cent equity in Armada, Everest and
Lomond and a 32 per cent equity in the tied-back Erskine field.
Production for the AELE hub was 38.8 kboepd in 2019 (as compared to
21.9 kboepd in 2018) and 34.0 kboepd for the six months ended 30
June 2020 (as compared to 39.7 for the six months ended 30 June
2019).
-- Armada: Armada is a combined wellhead, production and
accommodation platform. Upon taking over operations at Armada,
Chrysaor took the decision to extend the life of the Armada hub
fields which were originally intended to cease production in 2018.
Chrysaor also began production at the Maria Terrace February 2019
and together with the Crestal well, produced an average of 5kboepd
for the year. As a result, the Armada hub area fields produced 9.9
kboepd in 2019 (as compared to 4.3 kboepd in 2018). Chrysaor
commissioned the Hawkins well and completed and flow-tested Seymour
Horst. Both wells are now shut-in for topside construction works,
which is nearing completion. Both wells are expected to be brought
online after the 2020 annual shutdown.
-- Everest : North Everest is a combined wellhead, production
and accommodation platform producing gas and condensate. A further
infill development well within the Everest East Expansion area has
been identified and sanctioned and drilling of the New Subsea well
(LAD) is expected to take place in 2021. Furthermore, a late life
compression project has been approved to reduce the inlet pressure
of the North Everest Process, increase recoverable reserves and
extend field life. All asset life extension projects at North
Everest have been initiated to ensure safe and reliable operation
of the facilities beyond their projected field life and these
initiatives will be further developed and implemented in future
shutdowns. The North Everest Facility produced 16.4 kboepd in 2019
(as compared to 14.5 kboepd in 2018).
-- Lomond and Erskine : Lomond is a combined wellhead production
and accommodation quarters platform, processing gas and condensate.
Performance on the Lomond and the associated Erskine field
significantly improved in 2019 as the result of a targeted
improvement project. The Lomond liquid export pipeline which had
not been effectively pigged since 2009, resulting in wax blockages
is now routinely pigged and a late-life compression project is now
underway to reduce the inlet pressure of the Lomond process,
increase recoverable reserves and extend field life. Chrysaor
continues to develop and progress exploration and growth
opportunities which may further extend asset viability beyond the
currently scheduled end of field life. Lomond and Erskine together,
produced 12.5 kboepd in 2019 (as compared to 3.1 kboepd in
2018).
J- Area
Chrysaor holds 67 per cent equity in the Judy/Joanne and Jasmine
fields and 67.5 per cent equity in the Jade fields. In 2019 and the
six months ended 30 June 2020, the J-Area operating efficiency was
robust, producing 20.9 kboepd in 2019 (as compared to 16.4 kboepd
in 2018) and 33.4 kboepd in the six months ended 30 June 2020 (as
compared to 15.2 kboepd in the six months ended 30 June 2019).
Chrysaor's future activities in the J-area will focus on ensuring
reliability and modifying existing facilities. Work is continuing
in preparation for drilling activity in 2021, 2022 and beyond, with
development wells planned from Judy and Jade, and exploration and
appraisal wells on the Dunnottar, Talbot and Jade South
opportunities.
-- Judy/Joanne : Gas processed on the Judy platform is
transported through the CATS pipeline, with oil processing and
transportation from Judy to Teesside by way of the J-Area owned
spur-line, connecting to the Norpipe pipeline and terminal. In
2013, a new bridge-linked Judy Riser Platform (" JRP ") was
installed as part of the Jasmine development. The JRP provides
additional Judy well slots and hosts the high-pressure processing
facilities for the Jasmine field.
-- Jasmine : The Jasmine field comprises a Jasmine wellhead
platform and the Jasmine living quarters platform. Hydrocarbons are
produced via a multiphase pipeline to the Judy riser platform for
processing. In 2019, new incremental production was delivered via
the Jasmine infill drilling programme and saw completion of the
Jasmine well workover, Joanne North development well and the Merida
exploration well. Ongoing drilling operations are continuing and
expected to come on stream in 2020.The development drilling
programme is expected to continue over the next two years with two
additional wells to be developed and infill drilling targets across
the entire J-Area to continue to be matured in the course of 2020
as part of the hub- led infrastructure development strategy.
-- Jade : The Jade field is a normally unmanned installation.
Hydrocarbons are produced via a multiphase pipeline from the Jade
to the Judy platform for processing. Targeted well intervention in
2019 led to an increase in Jade production volumes and plans for an
infill and exploration drilling well programme continue to be
developed.
-- Talbot : The Talbot discovery is a light-oil and associated
gas resource opportunity located approximately 14 kilometres
south-east of the Judy platform. The Talbot licence was acquired in
October 2018 following the 30th Licensing Round. The joint venture
partners are the same as Judy and Joanne, with Chrysaor holding a
67 per cent equity stake.
Greater Britannia Area
Chrysaor has a range of equity interests, between 26.32 - 87.5
per cent in the Greater Britannia Area comprising five fields. The
hub has produced 40.3 kboepd since Chrysaor took ownership in
October 2019, which is equivalent to 10.2 kboepd on an annualised
basis. The Greater Britannia Area produced 42.9 kboepd in the six
months ended 30 June 2020 despite planned losses owing to a well
flow trial and a well intervention campaign.
-- Britannia : The Britannia field is one of the largest natural
gas and condensate fields in the North Sea. In 2019, significant
brownfield execution work was initiated, which included the
repurposing of existing infrastructure, and engineering work is
progressing to re-wheel the facility booster compressor and a FEED
study was undertaken to assess re-activation of the platform
drilling rig to enable infill drilling opportunities. The 40-day
Britannia shutdown scheduled for June and July 2020 has been moved
to 2021 and a short, planned, annual outage will take place later
in 2020 instead.
-- Brogdar/Callanish : The Brogdar gas condensate field and
Callanish oil field were developed as a combined project, utilising
subsea tiebacks to a processing and utility platform, bridge-linked
to the Britannia facilities. In 2019, a further infill well was
drilled and completed on the Brogdar field with initial rates circa
18.5 kboepd net, and a further infill well is planned for September
2021 at the Callanish field, with first production expected in the
first quarter of 2021.
-- Alder : Alder is a high pressure, high temperature gas
condensate reservoir. First production was achieved in 2016.
-- Enochdhu : Enochdhu was developed as a single-well tieback to
Callanish, with its first production in 2015.
East Irish Sea
Chrysaor owns a 100 per cent equity in the East Irish Sea assets
which are managed by Spirit Energy under contract. Comprising the
Calder, Millom and Dalton producing fields and the Rivers terminal,
since Chrysaor took ownership on 1 October 2019, the hub has
produced the equivalent of 2.1 kboepd on an annualised basis. The
East Irish Sea area produced 8.5 kboepd in the six months ended 30
June 2020. Production in the first half of 2020 was below
expectations due to control system issues at Calder, the Rivers
Terminal and unplanned compressor maintenance at the North
Morecambe Terminal. Chrysaor aims to perform a two week shutdown in
the second half of 2020 with the focus being the restoration of
reliability levels.
-- Calder, Darwen and Crossans : Calder produces sour gas and
was developed with an unmanned platform and three development
wells, exporting through a dedicated pipeline, which provides
compression, hydrogen sulphide removal and metering. In 2019,
operating efficiency for Calder was improved significantly and base
maintenance and integrity scopes for safety and production at
critical facilities were carried out. Field barge campaigns and
potential future helideck upgrades are anticipated at Calder in
2021, with continued work taking place to evaluate strategic
options with Spirit Energy to increase value for the overall
Morecambe Bay area, including, but not limited to several Chrysaor
owned satellite fields.
-- Millom and Dalton : natural gas at the Millom and Dalton
fields are produced through an unmanned platform and two subsea
manifolds. The gas is fed to the North Morecambe Terminal for
compression, dehydration and export to the grid. In 2019, base
maintenance and integrity scopes for safety and production critical
facilities were carried out and Chrysaor continues to work to
optimise the work programme and cost structure to develop the
longer-term strategy. In particular, Chrysaor is engaged in
improving and maintaining facility operating efficiency and the
development of a joint area plan in conjunction with the Oil and
Gas Authority. Field barge campaigns and potential future helideck
upgrades are anticipated at Millom in 2021.
Southern North Sea
Chrysaor has assumed the responsibility for an ongoing
decommissioning project on end-of life assets in the Southern North
Sea. This programme is well advanced and is expected to materially
complete by 2022. Chrysaor's equity in the area ranges from 20.0
per cent to 61.1 per cent and as part of the decommissioning
project.
-- CMS Area : The Caister Murdoch System (CMS) Area, consists of
the Murdoch, Caister, Boulton, CMS III, Kelvin, Katy and Munro
fields. Production from the CMS Area ceased in August 2018 and
decommissioning is ongoing as part of the wider SNS Area campaign.
The decommissioning scope consists of 28 wells to be plugged and
abandoned, 582 kilometres of pipelines to be flushed and cleaned
and eight platforms to be removed and recycled. In 2019, cleaning
of all pipelines was completed and in 2020 the Murdoch complex is
expected to be transitioned to cold suspension following completion
of well abandonment and the remaining wells will be plugged and
abandoned through to 2022 with platform removals continuing through
to 2024.
-- LOGGS Area : The LOGGS Area consists of the North Valiant,
South Valiant, Vanguard, Vulcan, Vampire, Viscount, Saturn, Mimas,
Tethys and Jupiter fields. Production from the LOGGS area ceased in
August 2018 and decommissioning is ongoing. The decommissioning
scope consists of 77 wells to be plugged and abandoned, 573
kilometres of pipelines to be flushed and cleaned and 17 platforms
to be removed and recycled. In 2019, a further 21 wells were
plugged and abandoned, and pipeline cleaning of the 119-kilometre
gas and methanol trunk lines was completed. Additionally, the LOGGS
complex was de-manned and transitioned into cold suspension and the
Ganymede platform was removed. The remaining wells are set to be
plugged and abandoned through to 2021 with the removal of platforms
and 26 wells continuing through to 2023.
-- Viking Area : The Viking Area consists of the Viking, Vixen
and Victor fields. Production from Viking ceased in 2016 and
decommissioning is ongoing. The decommissioning scope consists of
approximately 40 wells to be plugged and abandoned, 495 kilometres
of pipelines to be flushed and cleaned and 13 platforms to be
removed and recycled. Platform removals began in 2019 with eight
installations being removed and transported onshore for recycling.
In the course of 2020, two platforms have been removed and the
remaining three platforms will be removed in the course of 2020.
The final two subsea wells will be plugged and abandoned in
2021-2022.
-- Theddlethorpe Gas Terminal : Production at the onshore
Theddlethorpe Gas Terminal ceased in 2018 and decommissioning in
ongoing. Theddlethorpe Gas Terminal was deemed to be hydrocarbon
free in December 2019 and was transitioned into cold suspension,
with demolition expected to take 18 months to complete. Demolition
was begun in the first quarter of 2020 and land remediation and
restoration will follow through to 2023.
UK Non-Operated Asset s
Chrysaor has non-operated assets in the UK and works with
various operators to promote improved performance and add value to
its portfolio. Chrysaor is supporting various operators to improve
long-term performance through reservoir development, well planning
and commercial activities and additional targets are being
identified and drilled.
-- Beryl Area : Chrysaor has an approximately 39.5 per cent
interest in the Beryl area which is operated by Apache which forms
part of Chrysaor's UK Non- Operated Assets. The Beryl area produced
16.6 kboepd in 2019 and 2018 and 17.8 kboepd in the six months
ended 30 June 2020 (as compared to 15.9 kboepd in the six months
ended 30 June 2019). Production continued to be strong in the first
half of 2020 despite various production curtailments due to adverse
weather causing tanker offload delays and plant-trip challenges.
Three well interventions are planned for the second half of 2020,
with one well intervention deferred to 2021.
-- Buzzard : Chrysaor has a 21.7 per cent interest in Buzzard
which is operated by CNOOC Petroleum Europe. Buzzard's facilities
comprise four bridge-linked steel platforms which support wellhead
and production facilities, utilities/living quarters and a further
hydrogen sulphide stripping platform. Buzzard produced 23.2 kboepd
in 2019 (as compared to 24.3 kboepd in 2018) and 19.6 kboepd in the
six months ended 30 June 2020 (as compared to 26.4 kboepd in the
six months ended 30 June 2019), reaching a production milestone of
750 million barrels. The Buzzard infill platform drilling campaign
was also concluded in the first half of 2020 and as The Buzzard
Phase 2 campaign schedule was affected by the postponement of the
Cruden Bay FPS shutdown from summer 2020 to 2021, first oil is
delayed form March 2021 to December 2021.
-- Clair : Chrysaor has a 7.5 per cent interest in the BP
operated Clair field. On an annualised basis, the Clair field
produced 1.3 kboepd or 5.2 kboepd in the fourth quarter of 2019 and
5.3 kboepd in the six months ended 30 June 2020. Production well
B06 was brought on stream in the first quarter of 2020 and a second
water injector letter well B07 was completed, with plans in place
for further system testing in the third quarter of 2020.
-- Elgin/ Franklin : Chrysaor has a 14.1 per cent interest in
the Elgin/Franklin fields, high pressure, high temperature gas and
condensate fields. The Elgin/ Franklin field produced 16.4 kboepd
net in 2019 (as compared to 17.0 kboepd in 2018) and 19.7 kboepd in
the six months ended 30 June 2020 (as compared to 17.4 kboepd in
the six months ended 30 June 2019). A Franklin well was completed
in December 2019 and the next sanctioned Franklin well is expected
to complete in the fourth quarter of 2020. Much of the work
expected to take place in 2020 has been deferred to 2021, with only
safety-critical and regulatory compliance work scopes planned for
this year.
-- Schiehallion : Chrysaor has a 10 per cent interest in the
Schiehallion field. The Schiehallion field produced 7.2 kboepd in
2019 (as compared to 8.5 kboepd in 2018) and 5.6 kboepd in the six
months ended 30 June 2020 (as compared to 8.2 kboepd in the six
months ended 30 June 2019). In the course of the year, wells were
brought online, and the drilling of a water injection well was
completed and brought online in August 2020. Drilling has now
paused to review performance and to work up further targets for
further infill campaigns.
Norway
In January 2020, Chrysaor was awarded eight further production
licences on the Norwegian Continental Shelf by the Ministry of
Petroleum & Energy (" MPE ") in relation to the Awards in
Pre-Defined Areas (" APA ") 2019 Offshore Licensing Round.
Chrysaor now hold working interests in 11 licences over 18
blocks with an average working interest of 42 per cent, comprising
un-risked recoverable resources of more than 1.4 billion boe
Summary financial information on Chrysaor
Financial Overview
Six months ended 30 June
Year ended 31 December (unaudited)
----------------------- ---------------------------------
2018 2019 2019 2020
----------------------- ------------- -------- --------
Production
(kboepd)..............................................
........................... 105 137 123 187
Revenue and other income
(US$m)................................................
.. 1,965.6 2,366.8 1,055.1 1,243.6
Realised oil price
(US$/bbl).............................................
.................. 61.1 67.9 69.1 63.9
Realised gas price
(p/therm).............................................
................ 43 36 39.1 30.6
Operating cost per barrel
(US$/boe).............................................
.... 12.6 11.5 11.5 10.2
EBITDAX...............................................
.............................................. 1,404.7 1,691.8 823.8 919.8
(Loss)/ profit before tax
(US$m)................................................
........ 578.4 455.6 323.7 (233.4)
Profit after tax (US$m)
......................................................
................ 368.9 218.8 174.4 137.7
Capital investment
(US$m)................................................
................ 410 580 246.2 316.8
Operating cash flow after capital investment
(US$m)....................... 1,098 988 545.8 591.9
Net debt
(US$m)................................................
............................... 542.3 1,889.8 332.3 1,466.3
Consolidated Income Statement Six months ended 30 June
Year ended 31 December (unaudited)
----------------------- --------------------------------
2018 2019 2019 2020
----------------------- ---------- -------- ----------
(US$m)
---------------------------------------------------------
Revenue
.......................................................
................................... 1,965.6 2,357.8 1,055.1 1,230.0
Other
income.................................................
................................. - 9.0 - 13.6
Revenue and other income
.......................................................
..... 1,965.6 2,366.8 1,055.1 1,243.6
Cost of
sales..................................................
.................................. (1,120.9) (1,516.5) (568.4) (1,018.0)
Gross Profit
.......................................................
............................. 844.7 850.3 486.7 225.6
Impairment of property, plant and
equipment.............................. - - - (315.6)
Provision for onerous service
contracts.......................................... - - - (27.9)
Exploration and evaluation
expenses............................................. (7.9) (15.1) (8.1) (4.2)
Exploration costs
written-off............................................
............... (10.7) (0.2) (0.1) (38.8)
Loss on disposal of exploration and evaluation asset - - - (0. 1 )
Re-measurements........................................
.................................. 0.8 3.0 (21.3) 0.5
General and administrative
expenses............................................. (24.7) (75.5) (22.3) (29.2)
Operating profit
.......................................................
...................... 802.2 762.5 434.9 (189.7)
Finance
income.................................................
.............................. 46.5 31.6 10.2 105.1
Finance
expenses...............................................
............................. (270.3) (338.6) (121.4) (148.8)
(Loss)/ profit before taxation
.......................................................
. 578.4 455.5 323.7 (233.4)
Income tax credit/
(expense)..............................................
........... (209.5) (236.7) (149.3) 95.7
Profit for the period
.......................................................
................ 368.9 218.8 174.4 (137.7)
Consolidated Balance Sheet Data Year ended 31 December Six months ended 30 June (unaudited)
------------------------- -------------------------------------
2018 2019 2020
----------- ------------ -------------------------------------
(US$m)
----------------------------------------------------------------
Non-current assets
Goodwill 493.1 1,404.3 1,399.4
Other intangible
assets...................................... 58.9 430.5 446.1
Property, plant and
equipment......................... 3,743.8 7,679.6 6,500.3
Right of use
assets............................................ - 221.2 144.0
Other
receivables.......................................
....... - 2.6 2.9
Other financial
assets........................................ 191.5 202.3 313.5
Total non- current assets
................................... 4,487.3 9,940.5 8,806.2
Current assets
Inventories.......................................
................ 89.8 146.9 153.0
Trade and other
receivables.............................. 231.5 474.1 269.4
Other financial assets
....................................... 299.0 193.9 614.4
Cash and cash equivalents
................................ 316.4 573.2 369.4
Total current assets 936.7 1,388.1 1,406.2
Total assets
..................................................
..... 5,424.0 11,328.6 10,212.4
Equity and liabilities
Equity
Share
capital...........................................
........... 0.0 0.1 0.1
Share
premium...........................................
...... 234.8 910.0 910.0
Cash flow hedge reserve
.................................. 219.7 176.1 494.0
Costs of hedging reserve
.................................. 4.8 16.3 8.5
Currency translation
reserve.............................. (23.2) 76.6 (58.6)
Retained
earnings..........................................
... 500.1 729.9 592.2
Total equity
..................................................
.... 936.2 1909.0 1,946.2
Non-current liabilities
Borrowings........................................
................ 1,709.3 2,205.3 2,170.2
Provisions........................................
................. 1,475.7 3,766.8 3,368.4
Deferred
tax...............................................
...... 768.8 1,649.3 1,538.8
Trade and other
payables.................................. - 52.3 46.4
Lease
creditor..........................................
......... - 145.4 96.4
Other financial
liabilities..................................... 75.5 3.7 14.5
Total non-current liabilities
............................... 4,029.3 7,822.8 7,234.7
Trade and other
payables.................................. 296.4 676.4 759.0
Borrowings........................................
................ 95.6 617.4 11.9
Lease creditor
..................................................
. - 79.5 57.8
Provisions
..................................................
....... - 183.1 206.7
Other financial liabilities
....................................... 66.5 40.4 0.1
Total current liabilities
...................................... 458.5 1,596.8 1,031.5
Total liabilities
................................................. 4,487.8 9,419.6 8,266,2
Total equity and liabilities
................................. 5,424.0 11,328.6 10,212.4
Chrysaor - current trading
Chrysaor has shown resilience in the challenging business
environment created by the COVID-19 pandemic and the commodity
price collapse. A robust balance sheet, strong hedge book, flexible
portfolio and operational excellence of the business and people has
allowed Chrysaor to maintain production and deliver strong
financial results in 2020 year to date.
Chrysaor produced an average of 187 kboepd in the first half of
2020 but also paused most of its new drilling activity. After
down-manning in March 2020 to mitigate the effects of COVID-19,
through the summer Chrysaor began to increase the number of
personnel offshore and in September 2020 safely resumed its
operated drilling with the J Block S16 and Callanish F5 wells.
As with any material portfolio, during 2020 some of Chrysaor's
fields have produced above expectations and some have not.
In the AELE area, whilst production levels and efficiencies have
generally been maintained, the Hawkins and Seymour Horst wells were
not brought on to stable production due to facilities issues. These
wells will now come on stream in October 2020, however Chrysaor
expects them to deliver below pre-drill expectations. Depending on
observed performance a variety of remedial actions are under
consideration.
Exploration activity in the Beryl area Tertiary play has been
positive so far with 2 successful wells on Solar and Corona and the
currently drilling Gamma well results are highly encouraging. Each
discovery improves economics further with several development
scenarios under consideration including a possible combined
development with the adjacent Norwegian discoveries.
The Greater Britannia Area has seen excellent facilities uptime
and better than expected well performance from the Brodgar
satellite field.
On the Buzzard field, Phase 1 infill drilling has delivered on
or above target, but Buzzard Phase 2 drilling results have been
towards the lower end of expectations. Two wells from the North
Terrace programme were suspended without completion due to lower
than expected reservoir quality. Drilling has now been paused and
further wells and side-track activity will wait until after the
Phase 2 wells have been brought onto production.
On Clair, strong Phase 1 Production efficiency in 2020 offset
delayed drilling and poorer performance on Clair Ridge . On the
Ridge development, to date nine wells have been drilled of the 36
well programme. These early wells are producing lower than initial
pre-drill expectations and some have seen water breakthrough,
albeit expected given the nature of the reservoir. Chrysaor expects
lower near-term production than at project sanction but recent
updated reservoir models suggest ultimate recovery will be
maintained albeit with potentially the need for further wells. The
Clair South FID has been delayed by at least a year due to COVID-19
and the current commodity price. This will enable the partnership
to investigate several potential development scheme alternatives
including using power from shore and tie back options instead of
the previously proposed standalone facilities.
Elgin/Franklin's drilling continues and the fields have produced
above expectations in 2020. The operator is currently planning
facilities and integrity work towards a potential extension of
field life.
On the Chrysaor operated J Area, the impact of water
breakthrough in the Palaeocene wells has been ameliorated by an
active drilling and workover programme which will continue in 2021.
The partnership currently intends to increase drilling activity in
the area stepping up to two active drilling units in late 2021. A
Talbot appraisal well is planned for next year together with near
field exploration wells planned for Jade South and Dunnottar.
The award of 14 licences in the UK 32(nd) round adds significant
additional contingent and prospective resources in proximity to
Chrysaor's existing infrastructure. Whilst these will not
immediately add reserves to the portfolio they will be further
evaluated and matured, possibly contributing in the future.
Chrysaor reserves and resources report
To date Chrysaor, as a private company, has not been required to
commission, and has not commissioned, any reports on its reserves
and resources on the basis of, or to the standard required for,
inclusion in a FCA approved prospectus or circular. However, such a
mineral expert's report prepared by an independent competent person
is a requirement for, and will be included in, the prospectus for
the Transaction and is required to have an effective date no
earlier than 6 months before the date of that prospectus. A new
independent competent person reserves and resources report to meet
these requirements is currently being prepared to be included in
the prospectus for the Combined Group, and will be published in due
course as part of the prospectus for the Transaction (the " New
Chrysaor CPR ").
Earlier this year, Chrysaor had an independent competent person
reserves report (the " 1 January Chrysaor CPR ") prepared by LR
Senergy with an economic effective date of 1 January 2020. The 1
January Chrysaor CPR, which was dated 5 June 2020, was prepared in
line with the revised June 2018 Petroleum Resources Management
System (" PRMS ") guidelines. A copy of the 1 January Chrysaor CPR
is available on the Chrysaor website at www.chrysaor.com. However,
investors and analysts should note the reserves and production
guidance provided above and the additional points made below when
considering the information in the 1 January Chrysaor CPR.
Investors and analysts should not place reliance on the 1 January
Chrysaor CPR as if it were produced for inclusion in a prospectus -
as it was not.
In addition, it is important that investors and analysts note,
inter alia , the following:
-- The commodity price assumptions that will be used in the New
Chrysaor CPR are expected to be lower than those used in the 1
January Chrysaor CPR.
-- 2P reserves in the 1 January Chrysaor CPR stood at 542 mmboe
and production in the first half of 2020 was 34 mmboe. COVID-19
driven activity deferrals, some of the adverse drilling results
outlined above, together with expected lower commodity price
assumptions, potentially impacting an assessment of remaining
economic field life for certain fields, is likely to impact
reserves and conclusions on economic outcomes, which will only be
partially offset by any new 2P reserve additions.
Glossary of Industry Terms
boe means barrels of oil equivalent;
boepd means barrels of oil equivalent per day;
FEED study means a front end engineering design study which is conducted after the completion of a conceptual
design or feasibility study and is done to figure out if there are any technical issues and
estimate rough investment cost;
kboepd means thousand barrels of oil equivalent per day;
mmboe means million barrels of oil equivalent;
NCS means the Norwegian continental shelf;
Pence/therm means pence per therm, with one therm being the energy equivalent of approximately a hundred
cubic feet of natural gas;
RBL means reserves based lending;
UKCS means the UK continental shelf;
US$/bbl means dollars per barrels of oil;
US$/boe means dollars per barrel of oil equivalent;
2P reserves means 1P (proven reserves) plus probable reserves. Probable reserves are additional reserves,
which by analysis and geoscience and engineering data, are less likely to be recovered than
proved reserves, but more certain to be recovered than possible reserves. It is equally likely
that actual remaining quantities recovered will be greater than or less than the sum of the
estimated proved plus probable reserves;
IMPORTANT NOTICE
The information contained in this announcement is for
information purposes only and does not purport to be complete. The
information in this announcement is subject to change.
This announcement has been prepared in accordance with English
law, the Market Abuse Regulation and the Disclosure Guidance and
Transparency Rules and Listing Rules of the FCA and information
disclosed may not be the same as that which would have been
prepared in accordance with the laws of jurisdictions outside
England.
No person has been authorised to give any information or make
any representations to shareholders with respect to the Transaction
other than the information contained in this announcement and, if
given or made, such information or representations must not be
relied upon as having been authorised by or on behalf of Premier,
the Premier directors, Harbour or the Harbour directors, Chrysaor
or the Chrysaor directors or any other person involved in the
Transaction. None of the above take any responsibility or liability
for, and can provide no assurance as to the reliability of, other
information that you may be given. Subject to the Market Abuse
Regulation and the FCA's Disclosure Guidance and Transparency Rules
and Listing Rules, the delivery of this announcement shall not
create any implication that there has been no change in the affairs
of Premier, Harbour or Chrysaor since the date of this announcement
or that the information in this announcement is correct as at any
time subsequent to its date.
RBC Europe Limited is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Financial
Conduct Authority and the Prudential Regulation Authority. RBC
Europe Limited is acting exclusively for Premier and no one else in
connection with the transaction or any other matter referred to in
this announcement and will not be responsible to anyone other than
Premier for providing the protections afforded to its clients nor
for providing advice in relation to the transaction or any other
matter referred to in this announcement. Neither RBC Europe Limited
nor its parent nor any of their subsidiaries, branches or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not its
client in connection with this announcement, any statements
contained herein or otherwise.
PJT Partners (UK) Ltd ("PJT Partners") is acting as debt
financial adviser to Premier and no other person in connection with
the Transaction and this announcement. PJT Partners will not be
responsible to any person other than Premier for providing any of
the protections afforded to clients of PJT Partners, nor for
providing any advice in relation to any matter referred to in this
announcement. Without limiting a person's liability for fraud,
neither PJT Partners nor any of its affiliates nor any of its or
their respective directors, officers, representatives, employees,
advisers or agents shall have any liability to any other person
(including, without limitation, any Recipient) in connection with
the Transaction.
PJT Partners (UK) Ltd is authorised and regulated by the UK
Financial Conduct Authority. Its registered office is at One Curzon
Street, London, W1J 5HD. PJT Partners (UK) Limited is registered in
England and Wales as a limited company (company number 942
4559).
Jefferies which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting exclusively
for Premier and no one else in connection with the Transaction and
shall not be responsible to anyone other than Premier for providing
the protections afforded to clients of Jefferies nor for providing
advice in connection with the Transaction or any matter referred to
herein. Neither Jefferies, nor any of its affiliates, subsidiaries
or branches owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person other than Premier
in connection with this announcement, any statement contained
herein or otherwise.
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the Prudential Regulation
Authority and regulated in the UK by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting
exclusively for Chrysaor and no one else in connection with the
Transaction and shall not be responsible to anyone other than
Chrysaor for providing the protections afforded to clients of
Barclays nor for providing advice in connection with the
Transaction or any other matter referred to herein.
In accordance with the Takeover Code, normal United Kingdom
market practice and Rule 14e-5(b) of the US Exchange Act of 1934,
Barclays and its affiliates will continue to act as exempt
principal trader in Premier securities on the London Stock
Exchange. These purchases and activities by exempt principal
traders which are required to be made public in the United Kingdom
pursuant to the Takeover Code will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com . This information
will also be publicly disclosed in the United States to the extent
that such information is made public in the United Kingdom.
BMO Capital Markets Limited ("BMO"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for Chrysaor and no one else in connection
with the Transaction and will not be responsible to anyone other
than Chrysaor for providing the protections offered to clients of
BMO nor for providing advice in relation to the Transaction or any
other matters referred to herein.
The contents of this announcement are not to be construed as
legal, business or tax advice. Each shareholder should consult its
own legal adviser, financial adviser or tax adviser for legal,
financial or tax advice respectively.
Percentages in tables have been rounded and accordingly may not
add up to 100 per cent. Certain financial data have also been
rounded. As a result of this rounding, the totals of data presented
in this press release may vary slightly from the actual arithmetic
totals of such data.
Forward-looking statements
Certain statements in this announcement are forward-looking
statements. In some cases, these forward looking statements can be
identified by the use of forward looking terminology including the
terms "believes", "expects", "estimates", "anticipates", "intends",
"may", "will" or "should" or in each case, their negative, or other
variations or comparable terminology. These forward looking
statements reflect Premier's, Harbour's or Chrysaor's current
expectations concerning future events and speak only as of the date
of this announcement. They involve various risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Premier Group, the Chrysaor Group, the Combined
Group, third parties or the industry to be materially different
from any future results, performance or achievements expressed or
implied by such forward looking statements. Such risks,
uncertainties and other factors include, amongst other things,
general economic and business conditions, industry trends,
competition, changes in regulation, currency and commodity price
fluctuations, the Premier Group's, the Chrysaor Group's or the
Combined Group's ability to recover its reserves or develop new
reserves and to implement expansion plans and achieve cost
reductions and efficiency measures, changes in business strategy or
development and political and economic uncertainty. There can be no
assurance that the results and events contemplated by these forward
looking statements will in fact occur.
No statement in this announcement is intended as a profit
forecast or estimate for any period and no statement in this
announcement should be interpreted to mean that earnings, earnings
per share or income, cash flow from operations or free cash flow
for the Premier Group, the Chrysaor Group or the Combined Group, as
appropriate, for the current or future years would necessarily
match or exceed the amount set out in any forward-looking statement
or historical published earnings, earnings per share or income,
cash flow from operations or free cash flow for the Premier Group,
the Chrysaor Group or the Combined Group, as appropriate.
This announcement and the documents required to be published
pursuant to Rule 26.1 of the UK Code on Takeovers and Mergers (the
" Takeover Code ") will be made available for inspection on
Premier's website at www.premier-oil.com. It will also be able to
be accessed through Harbour's and Chrysaor's websites at
www.harbourenergy.com and www.chrysaor.com. Neither the content of
Premier's, Harbour's or Chrysaor's website (or any other website)
nor the content of any website accessible from hyperlinks on
Premier's, Harbour's or Chrysaor's website (or any other website)
is incorporated into, or forms part of, this announcement.
([1]) The amount they will own in the Combined Group will vary
depending on the level of take-up by Existing Creditors of the
partial cash alternative
([2]) Plus RCF drawings as under the Senior RCF Facility and
Super Senior RCF/LC Facility between 1 July 2020 and the
Restructuring Effective Date
([3]) Represents 2 months of operations November to December 2017
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
AGREQLBBBBLXFBL
(END) Dow Jones Newswires
October 06, 2020 02:00 ET (06:00 GMT)
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