Premier Oil announced this morning that it has reached an agreement to allow more time for the company to discuss new debt arrangements with its lenders.
The FTSE 250 oil group has been forced to renegotiate its financial covenants due to the prolonged oil price rout – earlier this year the group signed up Rothschild to lead talks with banks, with chairman Mike Welton warning: "If current low oil prices persist, then a further relaxation of our main financial covenants may be required."
Today, the company said its lending group has agreed that the test of Premier’s financial covenants set for 30 June 2016 will be waived and replaced by a test for the 12 month period ending 31 July 2016.
"This deferral allows further time to agree amendments to Premier’s medium term covenant profile and the resetting of its debt maturities," the firm added.
"In return for the proposed amendments, it is anticipated that additional security will be provided for existing debt holders."
Premier expects to conclude negotiations during the third quarter of this year and said that further deferral of the covenant test date will be sought if required.
The group said in May that it expected to beat its full-year production target, after output levels hit a record high – but the stock still slid, likely due to investor disappointment at a lack of update on the covenants issue.