Oil and gas firm Premier Oil (PMO) slumped 18.5% to 27.7p after it swung to a loss on lower production in the six months to 30 June 2020.

Separately the company announced plans to ask investors for a further $300m, on top of the $230m sought for the acquisition of assets from BP (BP.), as it looks to refinance its borrowings. Premier is sitting on net debt of $1.9bn.

The company has agreed heads of terms on a long-term refinancing deal which would extend its debt maturities from 2021 to 2025 but this is contingent on raising the $300 million – $204 million of which is underwritten by its creditors, who would convert their debt into equity if the cash is not sourced from investors. The interest rate on these borrowings will be 8.34%.

Premier reported a post-tax loss of $32 million before non-cash charges of $639 million adding up to an overall loss of $672m compared with a profit of $121m in the first half of 2019.

The company reported production of 67,300 barrels of oil equivalent per day (boepd) down from 84,100 boepd year-on-year but confirmed its full year guidance for output of 65,000-70,000 boped.

In a further crumb of comfort, the company said it would be cash flow positive in 2020. The company has struggled with its balance sheet for several years and despite financial restructuring efforts is still lumbered with significant borrowings.

The acquisition of BP’s Andrew Area and Shearwater assets in the North Sea, contingent on the refinancing going through, is critical to Premier’s ability to pay down debt.

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Issue Date: 20 Aug 2020