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Premier Oil says it has 'significant' liquidity after creditor calls for rethink
13th Mar 2020 07:10
(Sharecast News) - Premier Oil said it had "significant" liquidity with unrestricted cash of $135m and undrawn facilities of $330m at the end of February as a major creditor said the troubled producer was running out money and needed to review its debt obligations.
The British explorer is seeking court approval to buy oil and natural gas fields in the North Sea and the extension of more than $2bn in debt maturities to 2023. Oil prices have crashed due to a slump in demand caused by the coronavirus.
Hedge fund Asian Research & Capital Management (ARCM), which holds more than 15% of Premier's debt, on Thursday said Premier could spend $1.2m in cash a day.
ARCM also holds a short position on 17% of Premier shares. It has opposed the explorer's proposal to invest in the North Sea assets and is trying to block the plans, which are supported by the majority of remaining creditors.
"Premier Oil should be focusing on its cash flow position and protecting the balance sheet as a matter of priority," ARCM said Thursday in a statement.
"We encourage the company to engage with its creditors to find a long-term solution which would significantly reduce leverage and provide a stable balance sheet."
Premier on Friday said it was in talks on cutting its 2020 capital expenditure programme with initial analysis suggesting at least $100m of savings and deferrals could be made "with potential for further reductions".
The company said it would be broadly cash flow neutral in 2020 assuming a $100m reduction in planned capex and $35 per barrel oil price for the rest of the year. Full year production guidance was maintained.
The British explorer is seeking court approval to buy oil and natural gas fields in the North Sea and the extension of more than $2bn in debt maturities to 2023. Oil prices have crashed due to a slump in demand caused by the coronavirus.
Hedge fund Asian Research & Capital Management (ARCM), which holds more than 15% of Premier's debt, on Thursday said Premier could spend $1.2m in cash a day.
ARCM also holds a short position on 17% of Premier shares. It has opposed the explorer's proposal to invest in the North Sea assets and is trying to block the plans, which are supported by the majority of remaining creditors.
"Premier Oil should be focusing on its cash flow position and protecting the balance sheet as a matter of priority," ARCM said Thursday in a statement.
"We encourage the company to engage with its creditors to find a long-term solution which would significantly reduce leverage and provide a stable balance sheet."
Premier on Friday said it was in talks on cutting its 2020 capital expenditure programme with initial analysis suggesting at least $100m of savings and deferrals could be made "with potential for further reductions".
The company said it would be broadly cash flow neutral in 2020 assuming a $100m reduction in planned capex and $35 per barrel oil price for the rest of the year. Full year production guidance was maintained.