Jefferies ups Premier Oil to 'buy', expects full debt refinancing to go through

Premier said on Thursday that was in the final stages of negotiations with its banks and private bondholders on its refinancing. The oil producer said its lenders provided a revised term sheet last Friday, which will preserve the full amount of the existing facilities including undrawn amounts and amend the group’s financial covenants to provide sufficient headroom until after the North Sea Catcher field comes on stream next year.

Jefferies said the receipt of a revised term sheet from its principal lenders “is crucial evidence of bank support, and more importantly, support including unchanged facility size”.

The bank said Solan production issues at the second producer are frustrating, but since it hadn’t given the field full benefit of the expected 20,000-25,000 barrels of oil equivalent per day plateau, its forward group production estimates are not hit so hard.

In addition, it said that the small reduction in net debt that Premier pointed to on Thursday, to $2.8bn, is an important step in deleverage.

Premier said in its update that production in the period from 1 January to the end of October averaged 69,000 barrels of oil equivalent per day and it is on track to meet previously-increased full-year guidance of 68,000 to 73,000 barrels of oil equivalent per day.

In addition, the Catcher field is on schedule for first oil next year, with total capex now estimated at $1.7bn, 24% lower than at sanction.

At 0802 GMT, the shares were up 2.1% to 55.12p.