London — The merger of privately owned Chrysaor and London-listed Premier Oil to create potentially the largest oil and gas producer in the UK North Sea is on track for approval in a Scottish court next month after Premier's creditors approved a debt restructuring, part of a flurry of M&A activity stemming from last year's price crash.
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The merger is expected to create a sizeable publicly listed North Sea producer with an international footprint spanning Mexico, Indonesia and Vietnam, named Harbour Energy, after Chrysaor's private equity backers.
In a statement, Premier said meetings of its creditors on Feb. 22 had given the go ahead for a debt restructuring required for the merger to go ahead, and the deal was now subject to approval by the Scottish Court of Session at a hearing scheduled for March 19.
The scale of Premier's debts, at around $2 billion on a net basis, means current Premier shareholders will own only 5% of Harbour Energy, with senior creditors holding 18% and the rest held by the US private equity owner.
The merger is one of a number of recent deals and proposed deals in the UK upstream sector to have emerged from last year's oil price crash, one of the latest being ExxonMobil's announcement of talks on selling its UK assets to NeoEnergy, backed by Norwegian investor HitecVision.
The new Harbour Energy is intended to be the largest London-listed independent oil and gas company by production and reserves, and could be the largest oil and gas producer in UK waters.
Chrysaor rivals Total for the top spot in UK production terms, with full-year 2020 output estimated at 174,000 b/d of oil equivalent. It anticipates a 15% drop in production from its existing portfolio in 2021 due to heavy maintenance in the first half, as well as the deferral of drilling last year due to COVID-19.
But the combination should more than make up for that as Premier produced 42,000 boe/d in UK waters over the first 10 months of 2020, and 62,500 boe/d overall, including its production in Indonesia and Vietnam.
The merger entailed Premier dropping a previously agreed purchase from BP of North Sea assets, including the Andrew oil complex and a stake in the Shell-operated Shearwater assets.