LONDON (Reuters) - North Sea-focused Premier Oil (PMO.L), which has struggled to contain its $2.8 billion (£2.24 billion) debt pile, has agreed further terms with lenders to stretch out repayment of its debt after months of wrangling.
Premier has agreed to pay an additional 1.5 percent interest on debt repayments and to issue equity warrants to lenders equivalent to around 15 percent in the company’s issued shares, the company said.
The restructuring deal is expected to complete by the end of May by which time negotiations will have taken more than one year.
Premier’s debt rose after it bought the North Sea assets of German energy company E.ON last year and after weak oil prices ate into revenue streams. Its debt reached $2.8 billion in December.
“What today is about, although we’re not quite done, is that we can get on with the business of running the company,” Premier Chief Executive Tony Durrant told Reuters.
“We can get back to making some interesting decisions on the 700 million barrels of oil and gas we’ve got sitting underground, awaiting development.”
Premier’s Catcher oil field in the North Sea is expected to start producing the first oil before the end of the year, which will add another 50,000 barrels of oil to Premier’s production once it is fully operational.
Analysts welcomed the progress on Premier’s restructuring.
“Resolving corporate negotiations will allow greater focus on delivering the Catcher project on time and below budget in the second half of 2017,” said analysts at Bernstein, who rate Premier’s stock as ‘outperform’.
Premier’s shares were trading up 0.6 percent at 1200 GMT, underperforming the sector index .SXEP which was trading 1.1 percent higher.
Reporting by Karolin Schaps; Editing by Adrian Croft