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Does Premier Oil’s refinancing mean it is set for ‘lower risk, lower return’ future?

Managing the closer relationship between the company and the lenders will be “the next battle”, says SP Angel.

Premier Oil offshore platform
Premier has now moved closer to sealing its refinancing

SP Angel analyst Zac Phillips reckons Premier Oil PLC (LON:PMO) is set for a ‘lower risk, lower return’ future after its debt refinancing.

Premier Oil today confirmed it has now secured lock up agreements from its debtholders as it advances its refinancing arrangements.

It represents the final stage of requirements before the process of executing the financial restructuring, according to Phillips.

WATCH: Zak Mir on Premier "bottom-fishing" ...

The analyst says the refinancing, when it occurs, will be a relief to the Premier Oil share price, but the group’s longer term future will be less certain.

He believes that managing the closer relationship between the company and the lenders will be “the next battle”.

“At its conclusion, the future of the company passes into the creditors’ hands, which given their respective aims and objective (bondholders want their money back), will naturally result in a migration towards lower risk and return projects,” the analyst said in a note.

“The extent to which the company minimises or alters its exploration programmes will also be a function of the ability of the management to convince its new shadow operations committee that risks are worth taking.”

Quick facts: Premier Oil PLC

Price: 17.235 GBX

Market: LSE
Market Cap: £1.45 m

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