by Gregory DL Morris
Thursday, October 26, 2017
Premier Oil secures a major advance in its North Sea fortunes.
Premier Oil, a small independent producer with interests scattered around the world, secured a major advance in its North Sea fortunes when the BW Catcher floating production storage and offloading (FPSO) vessel arrived at the Catcher field October 18. The connection of the submerged turret production (STP) buoy mooring system was completed the following day. The vessel successfully completed a rotation test around the buoy. The final pull-in of the risers and umbilicals is now underway and commissioning activities have also commenced in parallel. Delivery of first oil remains on schedule by the end of the year.
That confirmation of the time table for the field being in production might seem mundane, but with winter weather approaching any slippage of time could have propagated further delays to commercial delivery of crude. Premier discovered the Catcher field in 2010.
Just last year Catcher purchased the North Sea assets of E.ON, which Premier said “reached payback in April 2017, earlier than anticipated as a result of stronger production and higher commodity prices.”
Further fine tuning its North Sea portfolio, in September Premier struck a deal is sell its entire interests in Licenses PL089 and P534, which contain the Wytch Farm field to Verus Petroleum SNS Limited for $200 million cash. Wytch Farm is an onshore oil field in Dorset, United Kingdom that has been producing since 1979. Verus is a UK-focused independent backed by HitecVision, a Norway based private-equity investor focused on offshore oil and gas.
Premier will use the proceeds to pay debt. In addition, Verus will assume all of the abandonment liabilities and associated decommissioning security. Premier will therefore be released from letters of credit, amounting to about $75 million, currently held for future field abandonment liabilities. Together, this will result in a reduction to Premier’s covenant net debt of approximately $275 million, taking into account cash flows retained post the effective date.
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