By Scott Wright

SHARES in Premier Oil surged by more than 25 per cent after the company negotiated a cheaper price to acquire a portfolio of North Sea assets from BP.

Premier had originally agreed to acquire stakes in the giant Andrew and Shearwater fields east of Aberdeen for $625 million (£510m) in January, before coronavirus and an oil price war between Russia and Saudi Arabia send crude prices into a nosedive.

However, Premier will now BP pay up to $325m in cash after the pair renegotiated terms in light of the crude price plunge.

Under the revised terms, the cash payable by Premier at completion has been reduced to $210 million, with a further $115m payable if the oil price recovers to $55 per barrel. BP will retain around $300m of estimated interim period cash flows.

READ MORE: Premier Oil in $900m North Sea expansion

The revised deal will also see BP pick up more of the abandonment costs when the fields reach the end of their producing lives, with Premier’s obligations reducing to $240m from $600m (pre-tax).

Meantime Premier also confirmed it had reached a settlement with its biggest creditor, Asia Research and Capital Management, which had sought to thwart its acquisition of the BP assets. Premier said ARCM, which had argued that the company should be focusing on reducing its debts, had withdrawn its appeal of the court’s judgment approving the schemes.

Premier will partly fund the acquisitions by through the issue of new shares to ARCM, which is expected to raise around $27.5m.

Chief executive Tony Durrant said: “We are pleased to have agreed revised terms with BP for the proposed acquisition of the Andrew Area and Shearwater assets, which are materially value accretive for the company.”

The price of Crude has staged a partial recovery since plunging to as low as $15.98/bbl in April, and was trading at around $42 per barrel last night. Brent fetched around $70/bbl in February.

Premier shares closed up 8.02p at 39.82p.