Page 7 - Euroil Week 01 2020

EurOil COMMENTARY EurOil
A major trend?
BP’s decision to scale back in the North Sea fol- lows similar moves by other international oil majors, eager to divert their capital to less costly production projects.
ConocoPhillips exited UK waters last year, and fellow US major ExxonMobil is quitting the European upstream sector altogether.
“BP has been reshaping its portfolio in the North Sea to focus on core growth areas, includ- ing the Clair, Quad 204 and ETAP hubs,” the company’s North Sea president, Ariel Flores, said. “We’re adding advantaged production to our hubs through the Alligin, Vorlich and Seagull tieback projects.”
The UK major still retains a considera- ble upstream and midstream presence in the mature region, with its activities centred west of the Shetlands and in the central North Sea. It is also actively investing in new projects such as the Clare field, where it raised its stake from 28.6% to 48.1% a year ago.
BP has a two-year goal to ditch $10bn of assets worldwide by the end of 2020. It is already near to meeting this aim, following major divest- ments such as the sale of its entire Alaskan busi- ness to Hilcorp last year for $5.6bn.
Bankrolling the spending spree
Premier plans to fund the acquisitions via a $500mn equity raise, its existing cash resources
and if needed, a $300mn bridge facility.
The company also revealed on January 7 it had extended its debt maturity timeline by more than two years to the end of November 2023. Its market capitalisation was only $1.1bn prior to the deal announcements, while its net debt is
around $2bn.
Premier has said it is confident it can get
backing from 75% of its creditors to get the latest deals done. But there is a hitch. Premier’s largest creditor, Asia Research and Capital Management (ARCM), has vowed to contest the company’s plan, which it said would “only serve to increase risk for stakeholders.”
ARCM controls more than 15% of the value of Premier’s debt instruments, and has blocking positions in two of them.
“We believe management’s immedi- ate priority should be on transactions that facilitate a significant deleveraging of the company’s highly levered balance sheet, so that it may meet the debt maturities that its creditors have already extended once in the 2017 restructuring – as opposed to pursuing acquisitions that expose the company’s bal- ance sheet to significant incremental risks,” ARCM said in a notice. “As such, ARCM will take all steps to oppose the company’s pro- posal and will vigorously contest any attempt to implement such proposal via a scheme of arrangement.” ™
Premier’s existing operations off the coast of the UK. Source: company website.
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