Chrysaor has agreed a reverse takeover of Premier Oil to create the UK North Sea’s largest oil and gas producer as the sector faces up to a big decline in demand.
Premier Oil shares have fallen about 85% in the year to date.
The deal by private equity-backed Chrysaor will involve Premier Oil’s creditors being paid about $1.23 billion in cash.
Premier shareholders will receive an expected 5.45% stake.
Chrysaor’s largest shareholder, Harbour Energy, is expected to own just over 39% of the combined company, which will stay listed on the London Stock Exchange.
The deal still needs to be approved by regulators and Premier’s creditors and shareholders.
Premier Oil chairman Roy Franklin said: “The board intends to recommend unanimously this transaction to shareholders as being in the best interests of shareholders and the company.
“This will mark a new and exciting chapter in Premier’s history.”
Premier CEO Tony Durrant said: “There is significant industrial, commercial and financial logic to creating an independent oil and gas company of this size with a leading position in the UK North Sea.
“The transaction will also provide the combined group with a solid foundation from which to pursue a fully funded international growth strategy.”
Harbour CEO Linda Cook said: “This transaction is the next step in Harbour’s aspiration to develop a new independent E&P company with global relevance.
“It significantly advances our leading position in the North Sea, where we will continue to re-invest, and expands our geographic footprint to Asia and Latin America.
“We are excited by the Premier assets in these regions and view them as the foundations upon which to build material portfolios and further diversify the company.”
Chrysaor CEO Phil Kirk said: “Through this deal we will become the UK’s largest London-listed independent E&P, by all key metrics.
“With our combined organisation and operatorship of a large part of our now international portfolio, we will have the ability to deliver value safely, and play our part in the energy transition.”
The combined company will have a new name and will be run by Harbour CEO Linda Cook, with Chrysaor CEO Phil Kirk becoming head of its European business.
Current Premier CEO Tony Durrant will not have a role in the group.
Chrysaor is backed by private equity firms Harbour and EIG and has become a major North Sea producer by buying up UK fields from Royal Dutch Shell and ConocoPhillips, spending about $5.7 billion since 2017.