North Sea producer Premier Oil has gained regulatory and antitrust approval to re-emerge under its new trading name Harbour Energy Plc. having agreed to a merger due to high levels of debt in late 2020. Leading U.K. energy independent Chrysaor Holdings Ltd. agreed on a reverse takeover of Premier in October 2020, paying $1.23 billion cash to fold one of the oldest independent producers in the world. Chrysaor and Premier are surprising everyone by announcing plans to recommence trade in the first quarter of 2021.
Harbour Energy Plc. is expected to start trading by 1st April, leaving behind its multi-million dollar debt. This follows approval for Premier's and Chrysaor licence interests in the UK from both the Oil and Gas Authority (OGA) and the Mexican Economic Competition Commission.
The merger gives Chrysaor a 77 percent stake in the entity, with 23 percent being held by Harbour Energy, an upstream investment subsidiary of private equity group EIG Global Energy Partners, based in Houston.
Having acquired assets from Royal Dutch Shell Plc, as well as several other firms, Chrysaor has risen to become the biggest oil and gas producers in the British North Sea. In 2020, Chrysaor was producing an average of 200,000 bpd oil equivalent, which was expected to increase by 70,000 bpd thanks to its acquisition of Premier.
The emergence of Harbour Energy Plc. comes at an increasingly positive time for the oil industry, with prices expected to reach $70 a barrel by the end of 2021.
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Like many in the industry, Chrysaor has been hit hard by the drop in oil demand due to the Covid-19 pandemic. Drilling activities scheduled for 2020 are now being planned for 2021, with a shutdown for repairs of the U.K.’s main crude pipeline scheduled for three weeks in May.
These works will affect Chrysaor’s production levels as seven of its fields rely on the Forties pipeline for oil delivery. Nevertheless, the increased production rate expected thanks to the Premier merger will help the company manage these production losses.
In addition, in 2020, Chrysaor outlined plans for various facility modifications and well campaigns across its oil fields, including the drilling of a new subsea well scheduled for 2021.
Chrysaor is not the only player betting on North Sea production. This week, ExxonMobil announced the sale of its non-operated assets in the North Sea to Norway-based private equity fund HitecVision for over $1 billion.
This deal is expected to double HitecVision’s oil production levels to 70,000 bpd equivalent.
Despite calls on energy companies to gradually reduce North Sea oil production, following in Norway’s footsteps, the region continues to be a major oil producer. Sales of North Sea oil totalled £24.8 billion in 2018, at an annual increase of 30.1%. Production in the region also accounts for an estimated 269,000 jobs.
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An estimated 30,000 jobs were under threat in the U.K.’s oil sector in 2020, due to severe cuts related to pandemic restrictions and a loss in oil demand. Plans such as those of Harbour Energy Plc. and HitecVision are hopeful for a region that has been hit hard both economically and by unemployment.
By Felicity Bradstock for Oilprice.com
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