Wednesday 23 September 2020 5:28 pm

Premier Oil seeks to lower price of BP purchases for a second time

Premier Oil has begun talks with BP over lowering the price of a $210m deal to buy its stakes in two North Sea oilfields for a second time, it was reported today.

Back in June, the struggling oil explorer managed to renegotiate the price down from an initial sum of $625m as it was hit by the record volatility in global oil prices.

The original sum was to be offset by BP keeping $300m of interim cash flows, while another $115m would only be payable upon higher future oil and gas prices.

Now, sources have told Reuters that the firm is seeking to reduce the price for the Andrew and Shearwater fields by another $70m to $80m.

Before the Open newsletter: Start your day with the City View podcast and key market data

The acquisition of the fields will help raise Premier’s production output to around 100,000 barrels a day from 67,000 at the moment.

Analysts at ratings agency Standard and Poor said that although the assets came at a “considerable cost”, they were “materially value accretive to Premier and are in line with the company’s stated strategy of acquiring cash generative assets in the UK North Sea”.

The step comes as Premier seeks to raise $530m to pay for the purchases and restructure its heft debt pile of around $2bn.

Both companies declined to comment on the report.

Shares in the firm rose 3.1 per cent over the day’s trading.