Premier Oil today revealed it has reached a "milestone" in completing its refinancing as it returned to post-tax profit.
For the year to the end of December, the British oil and gas explorer reported a loss before tax of $390.6m (£321.2m) after racking up a $829.6m loss the previous year.
It returned to profit after tax however, posting $122.6m, up from a loss of $1.1bn in 2015.
Net debt increased to $2.8bn at year-end, up from $2.2bn, but Premier noted debts had dipped since they peaked in the third quarter of 2016.
Production increased 24 per cent to a record 71,400 barrels of oil equivalent per day (boepd), driven by new contributions from the E.On UK portfolio, and 2017's production guidance was maintained at 75,000 boepd.
Why it's interesting
Chief executive Tony Durrant said Premier delivered a strong operational performance in 2016's "challenging backdrop".
However, the acquisition of E.On via debt funding alongside low commodity prices caused Premier to enter a prolonged period of refinancing discussions with lenders.
Earlier this month, the firm said convertible bondholders had agreed to amended terms, and today Durrant confirmed Premier has locked up agreements with the required majority of each of its lending groups, calling it a "major milestone".
"Based on the support now received, we can look forward to completion of the refinancing. Documentation to shareholders and public bondholders will be issued in due course," Durrant said in a separate announcement.
The refinancing is set to be complete at the end of May this year.
The firm today said it has been contacted by a number of other convertible bondholders who are concerned about the restructuring process and terms of the offer.
"We do not believe the Premier oil restructuring is home and dry, they still need 75 per cent of convertible bondholders approval which will not be easy," the spokesperson said.
What Premier Oil said
In 2016 we achieved record production, maintained a low operating cost base and completed the highly value adding acquisition of E.On’s UK upstream portfolio. Significant progress was made on our operated Catcher project which will deliver a further step change in our production levels once on-stream later this year.
Our complex refinancing has created uncertainty and volatility but is now nearing completion. Looking forward, our strong and growing cash flows will reduce our debt and in due course allow us to invest in new projects to deliver value for all our stakeholders.