May 13, 2020 / 6:46 AM / 18 days ago

UPDATE 1-Premier oil expects to be cash flow neutral in 2020

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By Shadia Nasralla

LONDON, May 13 (Reuters) - Oil and gas producer Premier Oil said on Wednesday that it expects to be free cash flow neutral this year due to weak oil prices, adding it would engage with stakeholders over extending debt maturities and raising equity.

Premier has hedged 30% of its 2020 production at $60 a barrel. Net debt stood at $1.91 billion at the end of April.

“In light of the ongoing weak oil price environment, Premier has entered discussions with its lending group to address its covenant profile with a view to securing any necessary waivers,” Premier said referring to commitments attached to its debt repayments which undergo regular tests by banks.

Proposed acquisitions include oil major BP’s stake in the Andrew and Shearwater fields and an increased stake for Premier in the Tolmount gas project for $625 million and $191 million, respectively. This is also predicated on a capital raise of at least $350 million.

A court last month approved a scheme of arrangement between Premier and its creditors to postpone its debt maturities by over two years to late 2023, but one debt holder, hedge fund ARCM, appealed against the plan, holding up any further moves until the appeal is resolved.

Premier is also expected to ask BP for a lower price for the assets, according to industry sources. Premier has $160 million of unrestricted cash and $330 million of undrawn debt facilities. (Reporting by Shadia Nasralla; editing by Louise Heavens)

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