BP and Premier Oil agree revised terms over North Sea assets sale

UK oil giant BP and independent Premier Oil have agreed revised terms for BP's sale of its Andrew Area and Shearwater assets to Premier Oil.

Under the proposed revised arrangements, the original consideration of US$625 million at the effective date of 1 January 2019 would be set off by approximately $300 million of estimated interim period cash flows to be retained by BP and a further $115 million would only become payable based on higher future oil and gas prices. The revised cash payable at completion of the proposed acquisitions is anticipated to be $210 million and is expected to be funded with equity, Premier Oil said in a statement.

In addition, both firms have agreed revised abandonment obligations that is now reduced to c.$240 million (pre-tax) from c.$600 million (pre-tax) previously agreed.

Premier and BP have confirmed their intention to complete the proposed BP Acquisitions, subject to debt and shareholder approvals, by 30 September 2020. The structure of the consideration and phasing of payments are being adjusted to reflect the material developments in global commodity markets.

Tony Durrant, CEO, commented: “We are pleased to have agreed revised terms with BP for the proposed acquisition of the Andrew Area and Shearwater assets, which are materially value accretive for the Company. The Stable Platform Agreement, once agreed with and approved by lenders, will provide a basis for the Company to continue discussions regarding proposed amendments to the Group’s existing credit facilities.”