Premier Oil Plc is set to buy stakes in North Sea oilfields Andrew and Shearwater from BP Plc for $625 million and increase its stake in the Tolmount gas project in a deal with Dana Petroleum Ltd. worth $191 million, it said Jan. 7.

Premier said the deals would generate more than $1 billion in free cash flow by the end of 2023, push its output above 100,000 barrels of oil equivalent per day by next year and add 82 million barrels of reserves and resources to its portfolio.

The acquisitions, the latest in a string of deals moving North Sea assets from oil majors to smaller groups, would be funded by a $500 million equity raise "which has been fully underwritten on a standby basis", existing cash and, if needed, a loan of $300 million.

Premier's shares shot up around 13% to their highest in over a year by 2:58 a.m. CST (8:58 GMT).

Premier had also announced an extension of its debt maturity timeline by over two years to the end of November 2023. Premier, which had a market capitalization of around $1.1 billion before the announcements, has a debt pile of around $2 billion.

CEO Tony Durrant told Reuters the response from major shareholders for the plans was "extremely positive" although hedge fund and Premier bondholder ARCM said it would fight the plans.

Premier said it was confident it had enough support from its other creditors to get permission for the transactions at a so-called at the Scheme of Arrangement Court meeting.

The group said it expected to confirm details of the issue in the first quarter.

ARCM, which has had a growing short position in Premier shares since 2017 reaching around 17% of the oil group's stock, around four times higher than the average for London-listed firms, objected to the plans.

ARCM, also describing itself as Premier's largest creditor at 15% of its debt instruments, said it would "take all steps" to oppose the deals, objecting to Premier's focus on North Sea gas assets amid strong Russian and U.S. gas imports.

In a string of announcements on Jan. 7, Premier's partner in the Sea Lion project off the Falklands Islands, Rockhopper Exploration Plc, said they had signed a preliminary deal for Navitas Petroleum LP to buy a 30% stake.

The new partnership will reduce Premier's obligations to build Sea Lion to around $285 million from $500 million, Durrant said.

"Today's announcements have the potential to transform it into one of the more investible names in the space," said BMO analyst David Round.

"Not only will these deals add scale and growth, but importantly Premier's deleveraging will accelerate towards much more manageable levels."

Offshore