BP slashes price of Premier Oil deal

BP has slashed the price of its deal with Premier Oil to sell the company oil and gas fields in the North Sea, after the price of crude collapsed by more than half in fewer than three months.

Under the new terms announced on Friday, Premier will now pay only $210m to BP on completion of the deal, as opposed to the $600m originally agreed upon in January.

The Telegraph first reported in early May that Premier was preparing to restructure its deal with BP in light of plummeting oil prices.

As part of the abridged terms, BP will hold on to $300m of cash flows from the fields for a period of time, while the estimated revised abandonment obligations have been reduced to $240m from $600m.

Crucially, the new deal puts to bed Premier's long running feud with key backer ARCM, the Hong Kong-based hedge fund that had moved to block the acquisition.

ARCM, a major investor in Premier’s debt, has also built up a huge bet against the company's shares, which have fallen by 65pc since the start of the year.

Premier's takeover of the BP North Sea oilfields is at the centre of a complicated restructuring of around $2bn (£1.6bn) of borrowing. ARCM has argued that Mr Durrant is overpaying for the assets and has opposed the deal and restructuring.

But now, as part of the new deal, ARCM has agreed to withdraw its legal challenge against the takeover, and has pledged to support the BP acquisitions.

This truce between the pair will entail Premier issuing 82.2 million new shares, representing 8.91pc of the enlarged company, to ARCM at a price of 26.69p per share, the proceeds from which will be used to fund part of the proposed BP acquisitions.