Written by Nicholas Roberts for Penguin News, October 2020

PREMIER Oil, the oil company with operatorship over the Sea Lion Oil field, was announced on October 6 to be merging in a reverse takeover (RTO) with Chrysaor Oil, a north European oil exploration and production company, forming the biggest independent exploration and production company on the London Stock Exchange (LSE).

The deal has been recognised in the press and on social media as being less in favour of Premier Oil than Chrysaor, the latter owned by Harbour. Harbour act as the source for the funds to solve financial difficulties for Premier which have led to Premier owing £2 billion pounds to its creditors.

Following the merger the Chief Executive of Harbour, Linda Cook, will become Chief Executive of the new company, with Chrysaor’s former CEO becoming President of the combined group. Current CEO of Premier, Tony Durrant, will step down from the Premier Group at year end.

When reached for comment by Penguin News, a spokesperson for Premier Oil said: “There is clear industrial, commercial and financial logic for this RTO, creating the largest London-listed independent oil and gas company with combined production as at 30 June 2020 of over 250 kboepd and significant international growth opportunities. Today’s transaction provides [the project management office] with a stable platform for future growth with the ability to fund and realise value from its development portfolio and international exploration projects.”

No specific indication has been given to the focus that will be given to the Falkland Islands Sea Lion project, but Linda Cook commented that the new group “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.” This potentially indicates interest in the South Atlantic.

The Premier Oil Board has indicated that it will “unanimously recommend this transaction to shareholders as being in the best interests of shareholders and the company” as Premier will acquire Chrysaor in return for the issunce of new Premier shares and Premier Group’s approximately £2 billion of total gross debt and cross-currency swaps will be re-paid and canceled - although EIG/ Harbour shareholders come out of this with a 39% stake, while Premier’s shareholders will have less than 6%.

Chrysaor chief executive officer Phil Kirk added, speaking to the BBC: “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.”

In an FIG press statement released on the afternoon of October 7, Stephen Luxton, Director of Mineral Resources for FIG, said: “We have been working closely with Premier Oil for some time to create attractive economic conditions in the Falkland Islands to facilitate external investment in the Sea Lion development project.

“The proposed transaction announced today is complex and will need further analysis, but it will undoubtedly strengthen Premier’s current position and create new opportunities to progress the Sea Lion development.”