Premier Proposes Takeover of Oilexco North Sea Limited
Premier has announced the proposed acquisition of Oilexco North Sea Limited (ONSL) for $505 million together with a rights issue of New Ordinary Shares to raise approximately £171 million (approximately $252 million) (the "Rights Issue").
Premier has today also released its annual results for the year ended December 31, 2008, contained in a separate announcement.
Premier has agreed to acquire ONSL, an oil and gas exploration and development company with interests in the UK North Sea, for $505 million in cash. The acquisition:
- has a compelling strategic, operational and financial rationale and represents a significant step change for Premier
- will provide Premier with a complementary asset base in the North Sea, balancing the group by delivering critical mass in a second core area in addition to Asia
- will provide Premier with an additional 60 mmboe of 2P reserves and contingent resources at 31 December 2008 (of which 40 mmboe is expected to be bookable to 2P by Premier) and unrisked reserve potential of up to 385 mmboe across 15 exploration prospects
- will enhance Premier's current production, adding an estimated 13,700 boepd of working interest production in 2009
- will provide Premier with significant North Sea operational capability via operatorship interests and an experienced operating team in Aberdeen
- has a purchase price equivalent to less than $8.50/bbl (without including any value for the significant tax losses being acquired)
ONSL, the principal operating subsidiary of Oilexco Inc., with interests in significant producing fields including Balmoral, Brenda, Nelson and Nicol is:
- to be acquired out of administration subject to, amongst other conditions, approval of a Company Voluntary Arrangement by ONSL's unsecured creditors and Oilexco Inc.
- to be acquired free of bank debt and historical rig and FPSO commitments
Fully underwritten Rights Issue to raise £171 million (approximately $252 million):
- 4 New Ordinary Shares for every 9 Existing Ordinary Shares at 485 pence per share
- 40% discount to the theoretical ex-rights price, based on the Closing Price of 952 pence per share
Balance of Acquisition funded from new credit facilities and existing cash resources:
- new credit facilities comprise $175 million 18-month acquisition bridge facility, $225 million 3-year revolving credit facility and $63 million and £60 million 3-year letter of credit facilities
Enlarged Group's balance sheet remains robust, with estimated $385 million liquidity at Completion, providing flexibility to execute the Enlarged Group's investment program.
- Acquisition and Rights Issue conditional on, inter alia, approval of Premier's shareholders at an Extraordinary General Meeting
- Transaction expected to complete in May 2009
Commenting on today's announcement, Sir David John KCMG, Chairman of Premier, said, "This is the most exciting development in Premier's recent history and offers the potential to create substantial value for our shareholders. The acquisition contributes significantly to Premier's strategic objective of growing production and cash flow. We will also maintain our high-impact exploration programme and continue to review selected value adding acquisitions within core areas."
Simon Lockett, Chief Executive, commented, "The acquisition of ONSL significantly expands our presence in the North Sea. It secures an attractive, high growth North Sea focussed business and delivers synergies with our existing North Sea assets at a compelling valuation of less than $8.50 per barrel.
"ONSL's complementary asset base significantly enhances our near-term production profile and cash flow and gives our North Sea business critical mass alongside that of our existing Asian assets. I am also pleased to end the uncertainty around the administration process for the employees of ONSL, who will have a continued and vital role in the future of Premier.
"With our conservative financing strategy, ample liquidity and an exciting drilling program ahead, I am confident in the continued success of the Premier group."
Operates 1 Offshore Rigs
- Independents Go Big in North Sea (Jan 03)
- European Oil Producers' Weak Hedging Shows Bet on Price Rebound (Jul 31)
- Mexico Oil Privatization Pays Off With Billion-Barrel Find (Jul 12)
Company: Oilexco more info
- Flexlife Completes Major Projects Using New Scanning Technology (Sep 15)
- Oilexco Files Eighth Default Status Report (Jul 21)
- Oil's Move Could Fuel E&P Deals (May 27)