Premier Oil drops on Chevron funding speculation

Shares in Premier Oil dropped on Monday after reports that the explorer was looking to drum up cash for some major asset acquisitions.

The FTSE 250 group hopes to buy around $1.5bn of oil fields in the North Sea that are being auctioned off by US oil major Chevron, the Sunday Times reported, suggesting that Premier is considering a rights issue or share placing.

Premier responded to the speculation on Monday, confirming its interest in the Chevron assets.

"Specifically, no firm decision has been taken to bid for all or any of the assets currently being marketed by Chevron and how, in the event that the group were to be successful, the acquisition of such assets would be financed," the statement said.

The company stressed that there was no guarantee that the group will bid in any process or that any process will complete.

Indeed, the Sunday newspaper report revealed that while Premier has made it past the initial round of bidding for the Chevron assets, it is understood to be facing competition from private petrochemicals business Ineos, private equity-backed Chrysaor and Israel's Delek Oil.

Premier directors took the opportunity on Monday to state that the operational performance from its Catcher vessel in the North Sea and assets in Asia were "strong", with production in the first two weeks of January averaging above 90,000 barrels of oil equivalent per day, up from the 80.5 kboepd in 2018 as revealed in its trading update last week.

Shares in Premier fell more than 10% to 71.35p after two hours of trading on Monday, undoing much of the strong recovery made since the 15-month low in December.