UK oil and gas contractors and companies have been struggling recently with plunging oil prices and the high costs of maintaining oilfields, especially in the North Sea. Many contractors and companies are involved in decommissioning mature oilfields, while others are actively looking for investors to fund oil and gas exploration.
Premier Oil, which is heavily in debt, is looking at alternatives to bank finance to fund its various projects, including a $1.5 billion project just off the Falkland Islands. The oil company confirmed that it has approached oilfield services companies to fund its North Sea and Falklands projects.
In February 2017, Premier Oil agreed to the terms and conditions laid down by lenders to refinance its existing debt, which totalled $2.8 billion at the end of December 2016. It is believed that shareholders will be focusing on the refinancing, particularly since the company has not received approval from a sufficient number of creditors.
The slump in oil prices has adversely affected Premier Oil, and its financial reports for 2014 and 2015 reveal that the company has suffered significant losses. The company is looking at two major investments over the next two years, which it hopes will reap profits. One is the Tolmount project in the North Sea, which is worth $600 million, and the other is the Sea Lion project just off the coast of the Falklands, which is worth $1.5 billion. The Tolmount project is the largest reservoir of gas in the basin that an oil company has discovered in the last few years.
Premier Oil Chief Executive Tony Durrant confirmed that the oil company is looking at various funding options, particularly for the Sea Lion project. It is also looking to convince oilfield services companies to invest as some have shown interest in working on this project.
Durrant added that bigger oilfield services companies have a larger capacity to invest, and that is why Premier Oil has approached companies such as Schlumberger and Halliburton.