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Premier Oil Plc, the indebted North Sea driller being swallowed by Chrysaor Holdings Ltd., will re-emerge as the largest independent oil and gas producer among UK stocks just as the global crude market roars back.
With the takeover expected to complete by the end of March, Premier will start trading under its new name, Harbour Energy Plc, on April 1. Putting behind it a multibillion-dollar debt pile -- due to be paid or canceled this quarter -- the firm should be well-positioned to ride the recovery in oil demand and boost investor returns.
“The new company will be much better placed than Premier, with a stronger balance sheet enabling it to pursue international growth and commit to a near-term dividend,” James Carmichael, an analyst at Berenberg, said in an email on Tuesday. There’s also a “very strong board that is being put in place.”
Harbour’s president will be Phil Kirk, who founded Chrysaor in 2007 with help from Barclays Plc and a U.S. private equity fund. Chrysaor made its first foray into UK waters 10 years later, buying assets from Royal Dutch Shell Plc, and after further acquisitions has become the No. 1 oil and gas producer in Britain.
Premier and Chrysaor said in December that Harbour would be a “highly cash-generative” business, producing more than 200,000 barrels of oil equivalent a day and with “significant” potential for international growth. While Premier’s business is weighted toward the North Sea, it also has assets in Asia and Latin America and has been working to get a project off the ground in the Falklands.
“Harbour Energy will start off with a significant production cash-flow base from its North Sea assets, alongside several upcoming projects to further build out its international portfolio and provide a growth driver,” said Daniel Slater, an analyst at Arden Partners Ltd. “The balance sheet will be in good shape.”
Oil Surge
The forthcoming deal completion is timely, with crude recovering from 2020’s historic rout to trade above $65 a barrel in London, the highest in more than a year. As the global demand recovery outpaces the supply response, Brent could rise to $75 in the third quarter, Goldman Sachs Group Inc. said this week.
Harbour is expected to boast a market value of more than $5 billion, according to Jefferies, a level never achieved by Premier. Jefferies’ price target of 30 pence a share “rates the stock a true investment peer to Norway E&Ps but with differentiated upside from exposure to international M&A growth,” it said.
Chrysaor shareholders will own 77% of Harbour Energy, with 18% held by Premier’s creditors and only 5% by Premier’s current shareholders.
The new vehicle’s emergence on the UK stock market also comes as multiple large oil producers start to scale back spending on fossil fuels in a transition toward low-carbon energy. That means there could be “increasing asset and project choice for a well-funded company if some other operators divert spending into more diverse energy sources,” Arden’s Slater said.
Since last year, there has been little dealmaking in the oil and gas industry as the coronavirus crisis roiled the market. Many closely held explorers and producers paused plans to go public, including North Sea players Wintershall Dea GmbH, Neptune Energy Group Ltd. and Siccar Point Energy Ltd. With oil prices now reviving, and the outlook strengthening, that may change.
“Longer term, if Harbour Energy is able to re-rate, it could encourage other North Sea focused private equity players to take their investments public,” said Nathan Piper, an analyst at Investec. “Harbour Energy is important for rejuvenating investor interest in the UK E&P space."
Source: Bloomberg
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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