Major North Sea operator Premier Oil is asking BP to cut the sale price of two oilfields in a proposed $625 million deal due to weak oil prices.
Chief executive Tony Durrant said the company is also talking to shareholders, creditors and brokers to adjust a plan to extend debt maturities and raise equity.
Premier had agreed in January to acquire stakes in a cluster of fields in the Andrew area and the Shearwater Development from BP for $625 million (£510 million).
But that was before the oil price dipped hugely as the Covid-19 hit the demand for crude.
Premier has been under pressure from a dissident investor to drop the deal but the company is set to proceed.
Durrant said in an interview with the Reuters news agency he was confident that Premier’s banks would waive a so-called covenant test in June, a regular exercise by banks to check if the oil and gas producer’s debt is less than three times its core earnings, which Premier is on course to breach.
Premier expects to be free cash flow neutral despite slumping prices due to its hedging programme, which sees 30 per cent of its 2020 production protected at $60 a barrel.
Its net debt stood at $1.91 billion at the end of April, dwarfing Premier’s market capitalisation of about $280 million.
Premier also plans to increase its stake in the Tolmount gas project, also in the North Sea for $191 million.
The deals are based on the company raising capital of at least $350 million.
