Premier Oil PLC's largest creditor, asset management firm Asia Research & Capital Management Ltd., expressed its opposition to the oil and gas producer's plan to extend its debt maturities for the funding of several acquisitions.
The firm, also known as ARCM, said in a Jan. 7 statement that the oil and gas producer's planned acquisitions of oil and gas interests in the U.K. North Sea will only increase risk for stakeholders.
ARCM, which holds over 15% of Premier's debt instruments, said Premier already has a high level of debt, with an upcoming May 2021 maturity amounting to $2.55 billion, composed of $2.2 billion in "accounting net debt" and $371 million of letters of credit.
"Through its announcement this morning ... [Premier] appears to be acknowledging that it cannot repay the outstanding debt in accordance with its terms," ARCM said.
ARCM said Premier should instead prioritize deals that would decrease its debt in order to meet its debt maturities, which have already been extended once during a 2017 restructuring.
Premier Oil announced that it is acquiring BP PLC's interests in the Andrew area in the central U.K. North Sea and non-operating interests in the Shearwater field for $625 million. It also struck an agreement to increase its interest in the Tolmount area in the U.K. North Sea by 25% for $191 million, plus contingent payments.