Creditors vote in favor of Premier’s North Sea deal despite objections

UK oil and gas company Premier Oil has gained approval from the majority of its creditors for the schemes of arrangement required for the acquisition of North Sea assets from BP and Dana. The schemes still remain subject to a court approval.

BP’s Andrew platform included in the deal with Premier; Image source: BP

Premier Oil received a court approval to go ahead with a plan to have its creditors vote to extend debt maturities and buy UK North Sea fields from BP and Dana in mid-January and convened the creditor meeting for February 12 despite objections by its largest creditor ARCM.

Premier announced on Wednesday that the scheme meetings of the super senior scheme creditors and senior scheme creditors of Premier and Premier Oil UK Limited were held earlier today.

The scheme meetings were held for the purpose of proposing resolutions to the scheme creditors to approve the schemes of arrangement required to implement the announced UK North Sea acquisitions, related funding arrangements, and extension of Premier’s credit facilities.

According to Premier, the resolutions at each of the scheme meetings were approved by the relevant majorities of the scheme creditors in each class being a majority in number representing at least 75% in value of those present and voting (in person or by proxy).

Namely, of the super senior scheme creditors, 86.81% in value of those voting approved the schemes with 99.30% in value voting, and of the senior scheme creditors, 83.86% of those voting approved the schemes with 96.51% in value voting.

ARCM: Court hearing not a ‘rubber-stamping’ exercise

The schemes remain subject to approval by the Scottish Court of Session with the sanction hearing currently scheduled to start on March 17, 2020.

Earlier on Wednesday, before the vote, Premier’s largest creditor, which has been opposing the acquisition since the start, said it would vote against the scheme proposal “as it believes the proposed acquisitions expose the company and its stakeholders to significant incremental risks.”

ARCM, the creditor, also said that regardless of the result of the vote, the March court hearing “is not a ‘rubber-stamping’ exercise and the Court will consider issues beyond the outcome of the vote at the creditors’ meetings in determining whether or not to sanction the schemes.”

At the sanction hearing, creditors who object to the schemes may raise their opposition, ARCM said.

“Above all, the Court must be satisfied that the statutory requirements have been met, the vote is fairly representative of the creditors concerned, there is no ‘blot’ on the Schemes, and that the Schemes are fair,” ARCM stated.

ARCM reiterated it would vigorously oppose the schemes and would take all necessary steps to do so, including opposing the sanctioning of the schemes.

Offshore Energy Today Staff

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Bristow to merge with Era to create offshore helicopter giant

Offshore helicopter operator Bristow and its peer Era Group have made a deal to merge in an effort to create a more diverse and financially stronger player.

A Bristow helicopter; Author: Ronnie Robertson

Bristow and Era Group announced on Friday that they had entered into a definitive agreement to combine the two companies in an all-stock transaction, creating a financially stronger company with enhanced size and diversification.

It is worth reminding that Bristow emerged from Chapter 11 bankruptcy back in November 2019. Bristow managed to reduce its debt significantly and emerged with $535 million of new capital.

“The combined company, which will be named Bristow, will strengthen its global leadership position with significant operations throughout the Americas, Nigeria, Norway, the United Kingdom and Australia for offshore aviation transportation and search and rescue solutions,” the two companies said.

“We believe this merger will create substantial value for the stakeholders of both companies,” said Chris Bradshaw, President and CEO of Era.

“The identified cost synergies are significant and, combined with the strong pro forma balance sheet and absence of capital commitments, support robust free cash flow generation. This merger achieves more efficient absorption of the significant fixed costs required to run an air carrier and better positions the combined company to manage industry challenges.”

“Bristow and Era share complementary cultures built on an unwavering commitment to safety and quality through experienced, well-trained trained pilots, mechanics, engineers and support staff,” said L. Don Miller, President and CEO of Bristow.

The merger will create a player with a combined fleet of more than 300 of modern aircraft and the world’s largest operator of S92, AW189, and AW139 model helicopters, according to the two companies.

The merger is expected to achieve pro forma annual revenues of approximately $1.5 billion and run-rate adjusted EBITDA of approximately $240 million. It will enable substantial and highly achievable cost synergies with an annualized saving of at least $35 million through the elimination of redundant corporate expenses and the realization of enhanced operational efficiencies.

Era CEO to head new company

Following completion of the transaction, the combined company will be headquartered in Houston, Texas. Chris Bradshaw, President and CEO of Era, will become President and CEO of the combined company. The senior management team will be named at a future date.

The combined company will have a nine-member board of directors, including seven members from Bristow and two members from Era, including the CEO. The Chairman and Vice-Chairman of the board of directors will be appointed by Bristow.

The transaction will be structured as a reverse triangular merger whereby Era will issue shares to Bristow stockholders. Era shares will continue to trade on the NYSE.

Under the terms of the agreement, which was unanimously approved by the board of directors of both companies, Bristow shareholders would own 77% of the equity of the new company and Era shareholders would own 23%.

The transaction is expected to close in the second half of 2020, following receipt of required regulatory approvals and satisfaction of other customary closing conditions, including approval by Bristow’s and Era’s stockholders. The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

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Total picks Maersk drillship to drill at ‘deepest water depth ever drilled offshore’

French oil major Total has selected a Maersk Drilling-owned drillship to drill at what the rig owner says will be a world record water depth in Angola-Namibia campaign. 

Maersk Voyager drillship
Maersk Voyager drillship; Source: Maersk Drilling

Maersk Drilling said on Tuesday that it had been awarded contracts for a three-well exploration drilling project by Total E&P Angola Block 32, Block 48 and Total E and P Namibia B.V. for the 7th generation drillship Maersk Voyager.

The Maersk Voyager will be employed offshore Angola and Namibia for a campaign which includes the deepest water depth ever drilled offshore, the rig owner said.

The project includes two wells offshore Angola in Blocks 32 and 48, plus one well offshore Namibia. The campaign is expected to start in January 2020, with an estimated duration of 240 days.

The total value of the firm contracts is approximately $46.3m, including a mobilization fee. The contracts include two additional one-well options.

Maersk said that the well in Angola’s Block 48 would be drilled at a new world record water depth of 3,628 m. According to the drilling contractor, the current world record is 3,400 m, set by Maersk Voyager’s sister drillship Maersk Venturer when it drilled the Raya-1 well for Total offshore Uruguay in 2016.

Morten Kelstrup, COO of Maersk Drilling, said: “We are thrilled to once again push beyond existing boundaries in collaboration with Total, drawing upon our mutual experience from the exciting deepwater exploration projects we have collaborated on over the years.”

Maersk Voyager is a high-spec ultra-deepwater drillship which was delivered in 2014. It has recently performed its scheduled Special Periodic Survey in Walvis Bay, Namibia, after completing campaigns in Ghana and Equatorial Guinea in 2019.

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SBM Offshore riding the FPSO renaissance wave

In surfing, reading the environment and anticipating a wave from a small lump on the horizon can be difficult, but rewarding.

This is what SBM Offshore, a Dutch-based FPSO industry specialist which has been building floating production units for 60 years, had done when after a rather dry period for FPSO orders it ordered an FPSO hull from China’s SWS Shipyard in July 2017.

FPSO suppliers usually order a hull when they have a contract for it secured, however, this FPSO hull, the first under SBM Offshore’s trademark Fast4Ward program was ordered on speculation, without a firm contract in hand.

SBM Offshore’s Fast4Ward program includes a generic hull based on Brazilian and West African environmental conditions, with the versatility to receive various large topsides with spread or turret mooring configurations.

The FPSO developed this way, SBM has said, can speed up delivery of an FPSO by up to 12 months. For a typical project, this can boost value for a client by more than US$0.5 billion, materially lowering project break-even prices, SBM Offshore has said.

This might be key to securing new contracts, as Rystad Energy recently said that while the future of the FPSO industry now looks bright after a few years of downturn, a key challenge going forward would be project execution and cost control.

From one hull to five in 2 years

Announcing its first Fast4Ward hull order on speculation in 2017, SBM Offshore said it was cautiously optimistic about the improvement in the FPSO market, and that it believed that Fast4Ward would give it a major competitive advantage once the FPSO market picks up, as it will fast-track projects compared with the industry average and can cut CAPEX and OPEX costs while providing clients earlier access to oil.

Fast forward (PUN INTENDED) to the end of 2019, SBM Offshore’s optimism has firmed up, as the company recently ordered its fourth and fifth Fast4Ward hulls – also in China, and according to a recent report by Rystad Energy, there may be a need for many more FPSOs in the coming years. More here.

The firm contract for the first Fast4Ward FPSO ordered in 2017, was secured in May 2019, and while the FPSO has been developed for Brazilian and West African environmental conditions, it won’t be deployed in either of the two regions. ExxonMobil will use it for its Liza 2 development in Guyana.

Come June 2019, SBM Offshore signed an LoI with Petrobras for the supply of an FPSO for the Mero 2 development in Brazil.

In August, construction began on the third Fast4Ward hull, and in December 2019, SBM Offshore ordered two more units in China, meaning SBM Offshore currently has five hulls on order,.

“I’ve been doing a few of these over the years, and this is quite historic, to be doing five FPSO hulls simultaneously. This has never been done before, by far,” SBM Offshore’s Managing Director Strategic Growth, Bernard van Leggelo, has recently said.

This is especially the case when one takes into consideration that the company has been ordering them without a firm contract in place.

Worth noting, the firm contract for the Mero 2 FPSO was signed earlier in December 2019 following an LoI with Petrobras. The hull is being built by China Merchants Industry Holdings (CMIH) shipyard in China, as the FPSO is set to be delivered in 2022.

First hull ready to sail away

If you read Offshore Energy Today, you could’ve read about each of these five FPSO hull orders, and you could’ve noticed that we’ve probably overused the artist’s impression of the Fast4Ward FPSO hulls showing three orange-box type units with various mooring types.

We did this simply because there were no photos to share as the first hull was still under construction. However, Offshore Energy Today was recently in China aboard the Liza Unity FPSO hull and now we have photos.

The hull of the first MPF – the Liza Unity – is basically fully complete, as the SWS workers had been finishing up painting works on it during our December visit.

The Liza Unity FPSO hull is scheduled to leave the SWS Shanghai shipyard in January 2020, on its way to Singapore where the topsides will be mounted aboard ahead of the final sail away to Guyana. This will be SBM Offshore’s largest FPSO so far.

It is designed to produce 220,000 barrels of oil per day, to have associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day.

The FPSO will be spread moored in a water depth of about 1,600 meters and will be able to store around 2 million barrels of crude oil.

Not just an orange box

While the first hull under the Fast4Ward concept was ordered in 2017, the thinking about the program began five years ago when the company started pondering how it could do better, bring ways of working to new levels, and to make the business less dependent on market cycles.

During our visit to China, we spoke with Bernard van Leggelo, SBM Offshore’s Managing Director of Strategic Growth to learn more about Fast4Ward.

“There is a lot of noise in the market that Fast4Ward is just an orange box, but the orange box is just one element of the philosophy and approach of delivery faster to the client.”

It may not be “just an orange box” but it is worth stressing that Fast4Ward’s box shape has its benefits over the traditional VLCC shape FPSO with a bow.

According to SBM Offshore, the current box-shaped hull of the Fast4Ward hulls, rather than a ship-shaped one, provides extra deck space for topside modules, allows for lower modules, less congestion, less piping, is safer to operate as you don’t have to climb six stairs up and six stairs down to the work, and is quicker to build.

Bow shape means less deck space. Given the fact that FPSO doesn’t have to move fast as it will spend most of its life on one or two locations, there’s no need for a bow, and no bow shape on Fast4Ward means 13 percent extra deck space vs traditional FPSOs converted from VLCCs.

This further allows for more space on hull facilitates lowering the modules for better access for maintenance, while improving safety.

Standard FPSOs have been built in the past, but “every one of those companies went bankrupt,” Van Leggelo said.

So, why is SBM Offshore different?

“The key difference is looking at the standardization of the individual building blocks while maintaining flexibility as FPSO at the end is still quite a custom piece,” Van Leggelo said.

So, with the MPF hull being one piece of the puzzle, the other piece SBM Offshore highlights as important is its catalog of the topsides and all the other pieces such as flare tower, helideck, cranes. It currently has about 70 entries for clients to choose from.

Van Leggelo said: “The clients have seen the benefits of our standards and of our flexibility. We can move faster without the constraints of moving fast. Because if you make a standard FPSO, as people tried 15 years ago, allegedly it’s ready to go but it never fits what the client wants. Combined with all the experience we’ve had with the units, the clients really start to see a big value proposition of Fast4Ward.”

What will prevent any other FPSO supplier from doing a similar thing?

“Well, they’re four years behind us, Paula Farquharson-Blengino SBM Offshore’s Press Offices says, smiling, and according to a recent report by the FPSO Network, track record is one of the most important things when it comes to ordering an FPSO.

By Bartolomej Tomić

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