Hedge fund steps up fight against Premier Oil's North Sea deal spree

Michael Bow

A hedge fund ramped up its attack on Premier Oil on Friday, questioning the explorer’s sums on a recently announced acquisition spree.

ARCM, a Hong-Kong based fund founded by former Wall Street debt trader Alp Ercil, opposes Premier’s plan to buy a string of North Sea assets from BP and US giant Dana.

It has threatened to block the proposal in court. ARCM also has a huge short position in the firm.

Today the fund said there were several “important details which are unclear yet critical” for shareholders and creditors.

One is Premier’s claim that it will bag $1 billion of free cash flow from the gas fields by 2023 to help pay down debt.

ARCM questioned the figure, saying the amount on offer may be lower because BP is set to keep cash flows from last January to when the deal completes this summer.

Premier declined to comment.

Stifel analysts said the cash BP gets to keep until the deal completes will be knocked off the $860 million price tag.

“We believe that this should not be a concern,” the analysts said.

Numis also laid into ARCM, saying: “The questions if anything point to just how weak ARCM’s position is in our opinion.”

Premier insiders say the $1 billion figure comes from BP and Dana rather than the company itself.

ARCM is locked in a war with the company and other creditors about the takeover.

The fund owns about $455 million of Premier debt and also has £160 million short position on its shares.

It opposes Premier’s plans to extend its debt payback by two years until 2023, however 40 of the other 41 creditors support the idea. A court case is due to decide the issue in early March.

Premier, led by Tony Durrant (pictured), is a major North Sea oil and gas explorer listed on the FTSE 250.

Shares have risen around 17% since the deal was unveiled earlier this month. They rose a further 0.35p on Friday to 112.35p.