TIDMPMO
RNS Number : 8315I
Premier Oil PLC
16 December 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.
Premier Oil plc
("Premier" or the "Company" or the "Group")
Update on proposed merger with Chrysaor and change of name
16 December 2020
Premier today provides an update on the proposed all share
merger between Premier and Chrysaor Holdings Limited ("Chrysaor"
and, following completion, the "Combined Group") and the
reorganisation of Premier's existing debt and cross currency swaps
(the "Transaction"). Premier also issues an update on its and
Chrysaor's trading and operational activities for the first 11
months of the year and reports 2021 guidance for both
companies.
A live webcast and conference call for analysts and investors
will be held on Thursday 17 December 2020 at 11am (GMT), the
details of which can be found on Premier's website
(www.premier-oil.com).
Publication of a shareholder circular and prospectus
Premier is pleased to announce that a shareholder circular (the
"Circular") and prospectus (the "Prospectus") in relation to the
Transaction are expected to be published later today, subject to
FCA approvals, and that the General Meeting of Premier's
shareholders to approve the Transaction has been scheduled for 12
January 2021.
The publication of the Circular and Prospectus marks an
important milestone for the Transaction which is expected to
complete by the end of the first quarter of 2021, as previously
guided.
On completion of the Transaction, Premier will be renamed
Harbour Energy plc ("Harbour Energy").
Board and management
As previously announced, it is anticipated that the Board of
Harbour Energy will comprise 11 directors: six independent
non-executive directors, two non-executive directors appointed by
funds managed by EIG Global Energy Partners ("EIG") and three
executive directors.
Blair Thomas, currently CEO of EIG, will be the Chairman of the
Combined Group from completion. Blair has over 30 years' experience
in the investment management business, with a focus on energy and
energy-related infrastructure and extensive management and board
experience.
As previously announced, Linda Cook will be CEO of Harbour
Energy and Phil Kirk will be President and CEO Europe from
completion. It is expected that a new Chief Financial Officer will
be identified prior to completion of the merger.
Harbour Energy's Board will also include, from completion:
-- Simon Henry (Senior Independent Non-Executive Director)
-- Anne L Stevens (Independent Non-Executive Director)
-- Anne Marie Cannon (Independent Non-Executive Director)
-- G. Steven Farris (Non-Executive Director)
It is expected that the three additional independent
non-executive directors will be announced prior to completion.
It is expected that each of the current non-executive directors
of the Board of Premier Oil, other than Anne Marie Cannon, will
step down from the Board with effect from the completion of the
Transaction.
Further to the information disclosed in this announcement and
the Prospectus that is expected to be published later today, there
is no further information to be disclosed pursuant to Listing Rule
9.6.13R.
Creating a strong UK independent oil and gas company of scale
with a global footprint
Harbour Energy will be the largest London-listed independent oil
and gas company by production and reserves. It will be a resilient
business with competitive operating costs. The Combined Group will
have a lower carbon intensity than the average UK oil and gas
producer, with targets in place for further improvements, and a
commitment to achieving 'Net Zero' greenhouse gas emissions by
2035.
The Combined Group will have a cash generative, diversified UK
business of scale with a significant operated position. It will
have a broad set of international growth opportunities with the
financial flexibility and capacity to realise value from a top-tier
development and exploration portfolio in addition to disciplined
M&A.
Harbour Energy will have a strong balance sheet. In addition,
the Combined Group is expected to generate sufficient free cash
flow to support shareholder returns including via a sustainable
dividend which, subject to market conditions and Board approval, is
expected to be introduced with respect to the financial year ending
December 2021.
ERCE Equipoise Ltd ("ERCE") Competent Person's Report
("CPR")
ERCE has prepared an independent CPR on the Chrysaor assets,
which will be included in full in the Prospectus that is expected
to be published later today. At 30 June 2020, ERCE has certified
that Chrysaor had 491 mmboe of 2P reserves and 388 mmboe of 2C
resources. These numbers do not include Premier's 2P reserves or 2C
resources.
Conditions to closing and timetable
The Transaction is subject, amongst other things, to Premier
shareholder and creditor consents and regulatory approvals. The
General Meeting for Premier's shareholders to approve the
Transaction has been scheduled for 12 January 2021.
As previously announced, Premier has received the requisite
level of creditor support for the Transaction and, immediately
after the Prospectus is published, expects to launch the
restructuring plan processes through the issuance of a practice
statement letter. To date, European Commission merger control
clearance has been received and regulatory approval from the
Norwegian MPE has been, conditionally, received.
The expected timetable of principal events to completion can be
found in the Appendix.
Premier Update
Premier provides the following update in relation to its trading
and operational activities for the first 11 months of the year and
guidance for 2021:
-- Production averaged 61.2 kboepd for the 11 month period and
Premier is on track to meet its full year guidance of 61--64
kboepd.
-- Premier expects 2021 production to be in the range of 61-66
kboepd. This reflects new production from Premier's operated
Tolmount gas field (due on-stream in Q2 2021) offset by natural
decline and maintenance shutdowns deferred from 2020.
-- Production at Premier's operated Catcher Area has been
restored to rates in excess of 60 kbopd (gross) following a seven
day unplanned outage in mid-November.
-- The Solan P3 well was brought on-stream in September and
subsequently produced at rates of over 10 kbopd in mid-November
with the ESP online. In early December, production from the Solan
field was shut in following the failure of the emergency generator
and Premier is actively progressing its repair.
-- The Tolmount platform was installed during October and batch
drilling of the four wells is underway. First gas is forecast for
Q2 2021 with Tolmount expected to add 20--25 kboepd (net) once on
plateau with all four wells completed, anticipated during Q4
2021.
-- Premier has retained significant growth optionality within its portfolio
- Zama (Mexico) unitisation and development plan negotiations progressing with Pemex
- Tuna (Indonesia) farm--out agreement signed with Zarubezhneft
in September. Fully--carried two well appraisal programme planned
for 2021
- Premier continues to assess the potential of the resources
associated with the Sea Lion project (Falkland Islands) which
represents a material opportunity for the Group
- Highly encouraging results from new 3D seismic data sets in Mexico and Indonesia
-- Forecast 2020 opex (ex--lease costs) unchanged at $12/boe and
full year capex (including abex) guidance now $315 million,
reflecting full year savings and deferrals of over $250
million.
-- Premier forecasts 2021 operating costs (ex-lease costs) of
$15/boe. This includes the tariff to be paid for the Tolmount
infrastructure. 2021 total capital expenditure (including abex) is
expected to be c. $275 million. 2021 guidance is provided on a
standalone basis and does not account for any optimisation that may
occur post completion of the Transaction.
-- Net debt at the end of November was $2.06 billion.
Premier also notes that Tony Durrant stepped down from the Board
of Directors on 16 December 2020. As previously announced, Richard
Rose will be the Interim Chief Executive until completion of the
Transaction, in addition to his current role as Finance Director.
Stuart Wheaton, currently Chief Operating Officer, will assume the
role of Interim Deputy Chief Executive.
Chrysaor Update
Chrysaor has provided Premier with the following update on its
trading and operational activities for the first 11 months of the
year and guidance for 2021:
-- Production averaged 174 kboepd for the 11 month period and
Chrysaor forecasts full year production of 174 kboepd, in line with
its full year guidance of 170-180 kboepd.
-- Chrysaor expects 2021 production to average in the range of
140-155 kboepd. This reflects an expected 2020 second-half
production forecast of c. 160 kboepd and an unusually high level of
asset shutdowns during 2021, driven by COVID-19-related 2020
maintenance deferrals. The COVID-19 related suspension of some
drilling activities in 2020 has also impacted the 2021 production
forecast.
-- Operated portfolio:
- J-Area averaged 31 kboepd (net), with the impact of water
breakthrough in the Palaeocene wells ameliorated by an active
drilling and workover programme which is expected to continue into
2021. The joint venture partners are considering adding a second
drilling unit in late 2021 to appraise the Talbot discovery and to
drill the Dunnottar exploration prospect.
- Greater Britannia Area averaged 40 kboepd (net), benefitting
from excellent uptime and better than expected well performance
from the Brodgar satellite field. Chrysaor expects first production
from the Callanish F5 well in Q1 2021.
- In the AELE (Armada, Everest, Lomond and Erskine) area,
production averaged 31 kboepd (net). In December, Chrysaor
sanctioned the LAD infill development well at Everest East with
drilling scheduled for Q3 2021.
-- Non-operated portfolio:
- The Total-operated Elgin Franklin area averaged 19 kboepd
(net), ahead of expectations with the fields benefitting from very
high production efficiency and an ongoing infill drilling and well
intervention programme. The operator is currently planning
facilities and integrity work towards a potential extension of
field life.
- Production from the Buzzard field averaged 19 kboepd (net).
Phase 1 infill drilling has delivered on or above target while
Buzzard Phase 2 drilling results have been towards the lower end of
expectations. 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, now expected in December 2021.
- Beryl Area fields averaged 17 kboepd (net), supported by an
ongoing well intervention programme and continued infill drilling.
Exploration activity in the Beryl area Tertiary play has been
positive so far with two successful wells drilled on the Solar and
Corona prospects.
-- Chrysaor's operating costs (including net tariff costs) for
the 11 months to the end of November averaged $11.4/boe. Chrysaor
expects unit operating costs to be higher in 2021 than the 2020
outturn, but below its long-term target of $15/boe (including net
tariff costs). This is as a result of lower forecast production and
increased maintenance expense in 2021.
-- Chrysaor's total capital expenditure (including exploration
and decommissioning) to the end of November 2020 was $651 million.
Chrysaor expects total capital expenditure for the full year 2020
to be around $718 million. This is approximately $575 million lower
than forecast at the outset of the year, reflecting the pause in
non-essential platform activity and the suspension of operated
drilling activities for nearly six months.
-- Chrysaor expects total 2021 capital expenditure to be in the
range of $750-850 million, principally relating to drilling and
development activities at J-Area, AELE, Beryl and Buzzard field,
and including c. $170 million for decommissioning (pre-tax
relief).
-- Chrysaor benefits from a significant hedging programme with
approximately 67 per cent of its 2021 1H oil volumes hedged at an
average price of $60/bbl, and 73 per cent of its 2021 1H gas
volumes hedged at an average price of 42 pence/therm.
Enquiries
Premier Oil plc 020 7824 1116
Richard Rose, Finance Director
Elizabeth Brooks, Head of Investor Relations
RBC Capital Markets (Financial Adviser, Sponsor and Joint
Corporate Broker) 020 7653 4000
Matthew Coakes
Martin Copeland
Paul Betts
Rupert Walford
Elliot Thomas
Jefferies (Joint Corporate Broker)
020 7029 8000
Tony White
Will Soutar
Camarco (Advisers to Premier, UK & International Media) 020
3757 4983
Billy Clegg
Georgia Edmonds
Chrysaor enquiries
Brunswick Group (Advisers to Chrysaor, UK & International
Media) 020 7404 5959
Patrick Handley
Will Medvei
Sard Verbinnen & Co. (Advisers to EIG, US Media)
+1 212 687 8080
Kelly Kimberly
Brandon Messina
Appendix
Directors' biographies
(A) Linda Cook (Chief Executive Officer designate)
Linda Cook is Chief Executive Officer (CEO) of Harbour Direct
Holdings Ltd and managing director and member of the Investment and
Executive Committees of EIG, positions she has held since 2014.
Since 2017, Linda has also served as the non-executive chairman of
Chrysaor. She retired from Royal Dutch Shell plc in 2010, at which
time she was a member of the board of directors and the executive
committee. During her 29 years with the company, she held positions
including CEO of Shell Gas and Power (London); CEO of Shell Canada
Limited (Calgary); executive vice president Strategy and Finance
for Global Exploration and Production (The Hague); and various US
Exploration & Production management, operational and
engineering roles. She received a B.S. in Petroleum Engineering
from the University of Kansas and is currently a trustee for the
University's Endowment Association, a member of the Society of
Petroleum Engineers and a non-executive director on the Board of
BNY Mellon.
(B) Phil Kirk (President; Chief Executive Officer, Europe
designate)
Phil Kirk is CEO of Chrysaor. After qualifying as a chartered
accountant with Ernst & Young in 1991, he joined Hess in 1996
where he served a variety of roles including head of finance, North
West Europe. In 2002, Phil set up CH4 Energy with two ex-colleagues
where he was joint managing director. CH4 acquired and operated the
Markham field and associated satellites on the UK/Dutch median
line. After selling CH4 to Venture Production in 2006, he founded
Chrysaor in 2007 and has led the group since then. Phil has been a
member of the Board of Oil and Gas UK since 2013 and currently
serves as its co-chair. He is also a past co-chair of the OGA UK
Exploration Board, one of six boards responsible for driving the
industry's response to the OGA's MER UK (Maximising Economic
Recovery) strategy, and he is a Fellow of the Energy Institute and
a member of the Society of Petroleum Engineers. Phil has a BSc in
Mathematics from Warwick University.
(C) R. Blair Thomas (Non-Executive Chairman designate)
R. Blair Thomas has more than 30 years' experience in the
investment management business, with a focus on energy and
energy-related infrastructure. Blair is the CEO of EIG, and chairs
the firm's Investment and Executive Committees. EIG is among the
largest institutional investors in the energy sector and is active
across the energy value chain and around the globe. Blair is also a
member of the Board of Directors and the Investment Committee of
FS/EIG Advisor, the investment advisor to FSEP, a non-traded
business development company focused on the energy sector. EIG was
formerly part of Trust Company of the West, where Blair was a Group
Managing Director and a member of the Board of Directors of TCW
Asset Management Company. Prior to joining EIG in 1998, Blair was a
senior investment officer with the Inter-American Development Bank
and a project finance attorney at the law firm of Brown & Wood
in New York. Blair also served in the administration of President
George H. W. Bush as an advisor on energy and budget policy. Blair
received a B.A. from the University of Virginia, a J.D. from New
York Law School and an L.L.M. from Georgetown University Law
Center. Blair is also the Chairman of Limetree Bay Ventures, and
Prumo Logistica S.A., both private companies. Since 2014, Blair has
served as the Chairman of the Board of Directors of Harbour Direct
Holdings Ltd. and has been a member of the Board of Directors of
Chrysaor since 2017.
(D) G. Steven Farris (Non-Executive Director designate)
Steven Farris served as chairman and CEO of Apache Corporation,
an oil and natural gas exploration and production company with
operations in the United States, Canada, the United Kingdom, Egypt,
and Australia. Steve was named chairman of Apache in January 2009,
upon the retirement of company Founder Raymond Plank. He was
promoted to president in 1994 and CEO in May 2002. Steve joined
Apache in June 1988 as vice president of domestic exploration and
production and was promoted to senior vice president in May 1991.
Prior to joining Apache, Steve was vice president, finance and
business development, of Terra Resources, a subsidiary of Sempra
Energy. Before working at Terra, he was executive vice president of
Robert W. Berry, Inc., an independent exploration and production
company. Steve began his career with Deloitte, Haskins & Sells
as a Certified Public Accountant, earning his CPA license in 1972.
Steve is the former chairman of America's Natural Gas Alliance, the
American chairman of the US-Egypt Business Council, a member of the
Business Roundtable, a member of the Executive Committee of the
M.D. Anderson Cancer Center Board of Visitors, and a member of the
Fund for Teachers Board of Directors. He holds bachelor's degrees
in history and accounting from Oklahoma State University. Steve has
served as a non-executive director of Chrysaor since 2017 and has
been a member of the Board of Directors of Harbour Direct Holdings
Limited since 2015.
(E) Simon Henry (Senior Independent Non-Executive Director
designate)
Simon spent 35 years in an executive career with Royal Dutch
Shell plc, retiring as CFO and Executive Director in March 2017. He
has since developed a portfolio of non-executive and advisory
roles, in both the public and private sector. He has a particular
interest in strategy, financial performance, risk management and
corporate governance. He became CFO and a member of the Board of
Royal Dutch Shell plc in May 2009. In addition to responsibility
for all financial activities of the company, he was responsible for
Strategy, Planning and Information Technology, and acted as
Regional Executive Director for Asia Pacific with specific
oversight of new business development in China. Simon is a member
of the boards of Rio Tinto, where he chairs the Audit Committee,
and the Ministry of Defence, where he chairs the Audit and Risk
Assurance Committee. He is also a member of board of PetroChina,
where he is a member of the Investment and Development Committee.
He joined the Board at Lloyds Banking Group in 2014 and Chaired the
Audit Committee for three years before resigning from the Board at
the end of September 2020. Simon was previously a member of the
Main Committee of the 100 Group of UK FTSE CFOs and Chair of the
European Round Table CFO Taskforce, and remains a member of the
Advisory Board of the Centre for European Reform, a UK based think
tank. He provides advisory services to a venture capital company
through Oxford Sciences Innovation. He is a Fellow and member of
the Advisory Panel of CIMA (Chartered Institute of Management
Accountants), and a Trustee of the Cambridge China Development
Trust. Simon was born in the UK in 1961 and joined Shell after
graduating in Mathematics from Churchill College, University of
Cambridge in 1982, initially working as an engineer at Stanlow
refinery in the UK. Simon will serve as the Senior Independent
Non-Executive Director from completion of the Transaction.
(F) Anne Stevens (Independent Non-Executive Director
designate)
Anne Stevens has over 30 years of experience in manufacturing
and management, becoming the first female Vice President Executive
of Ford Motor Company and the first female CEO of Carpenter
Technology. Anne started her career in 1980 at the Exxon Chemical
Company, where she served in multiple engineering and manufacturing
positions before joining the Ford Motor Company in 1990 as a
marketing specialist. She became Vice President of North America
Vehicle Operations in 2000 and Chief Operating Officer for the
Americas in 2005. She was the recipient of various awards including
the Shingo Prize for Leadership and the Eli Whitney Award from the
Society of Manufacturing Engineers, resulting in her being honoured
by the Automotive Hall of Fame. Anne served as Chairman, President
and CEO of Carpenter Technology from 2006 until 2009. In 2018 she
was appointed as CEO of GKN Aerospace on an interim basis to
prevent a hostile takeover. Anne has also previously served as
chairman, CEO and principal of SA IT from 2011 to 2014, as a
non-executive director on the board of XL Group from 2014 to 2018
(where she chaired the operations and technology committee and
served on the risk and finance and audit committees) and Lockheed
Martin from 2002 until 2017 (where she chaired the management
development and compensation committee and served on the audit,
ethics and sustainability and nominations committees). She has been
a non-executive director at Anglo American since 2012 (where she
chairs the remuneration committee and serves on the audit and
nomination committees). Anne received a B.S. in Materials and
Mechanical Engineering from Drexel University in 1980 and was
elected to the National Academy of Engineering in 2004. Anne will
serve as chairman of the Remuneration Committee from completion of
the Merger.
G) Anne Marie Cannon (Independent Non-Executive Director
designate)
Anne Marie Cannon joined Premier Oil's Board as a Non-Executive
Director in February 2014. She has over 30 years' experience in the
energy and banking sectors, including roles at Thomson North Sea,
Shell Exploration and Production and J Henry Schroder Wagg. She was
previously a senior advisor to the natural resources group at
Morgan Stanley, focussing on upstream mergers and acquisitions. She
is currently the deputy chair of the board of Aker BP ASA, a
non-executive director of Aker Energy AS, a non-executive director
of STV Group plc and chairs the remuneration committee of STV Group
plc. She is also a Senior Advisor at PJT Partners Inc. She has
previously held executive director roles on the boards of Hardy Oil
and Gas and British Borneo. Anne Marie is currently a member of
Premier's Audit and Risk Committee, the Nomination Committee and
the Remuneration Committee.
Breakdown of Chrysaor's 2P reserves and 2C resources (net to
Chrysaor, mmboe) as at 30 June 2020 (as per ERCE's CPR)
2P reserves(1) 2C resources(1)
---------------
AELE Hub 75 145
J-Area 137 50
Greater Britannia
Area 60 62
East Irish Sea 19 20
Beryl Area 28 30
Buzzard 45 -
Clair Area 49 37
Elgin Franklin 52 3
Schiehallion 24 3
Bressay 19
Norway 19
Other 1
------------------- --------------- ----------------
Total 491 388
------------------- --------------- ----------------
(1) As per ERCE's CPR, rounded to the nearest 1 mmboe
Expected timetable of principal events
Announcement of the Merger and Debt Restructuring 6 October 2020
Publication and posting of the Prospectus, 16 December 2020
the Circular, the Notice of General Meeting
and Forms of Proxy
Latest time and date for receipt of Forms 2pm on 8 January
of Proxy 2021
General Meeting 12 January 2021
English Court hearing to convene the English 19 January 2021
Restructuring Plan Creditor Meetings
Scottish Court hearing to convene the Scottish 25 January 2021
Restructuring Plan Creditor Meetings
Restructuring Plan Creditor Meetings 22 February 2021
English Court hearing to sanction the English 9 March 2021
Restructuring Plan
Scottish Court hearing to sanction the Scottish 19 March 2021
Restructuring Plans
Readmission and Admission and dealings in by 8am on 29 March
New Ordinary Shares, fully paid, commence 2021
on the London Stock Exchange
Completion of the Merger and Debt Restructuring 29 March 2021
becomes effective
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