THE fallout from the renewed crude price plunge has intensified as Premier Oil faced calls to scrap two big North Sea acquisitions and Tullow Oil announced plans to cut emplooyee numbers by 35%.

Premier clinched two North Sea deals in January worth up to around $900 million (£714m) only to find the oil market thrown into turmoil amid fears about the impact of the coronavirus and the start of a price war between Russia and Saudi Arabia.

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The Brent crude has fallen by around a third since Friday when talks between the two countries about how to respond to the impact of the coronavirus on demand broke down.

The fall gathered pace yesterday following President Trump’s decision on Wednesday to ban flights between many European countries and the USA to slow the spread of the virus. Brent crude sold for $33.09/bbl yesterday afternoon, down $2.70/bbl on the day.

Against that backdrop Hong Kong based hedge fund Asia Research and Capital Management has stepped up its campaign to get Premier to scrap the North Sea deals it agreed in January with BP and Korean-owned Dana Petroleum.

Premier Oil clinches $900m North Sea deals amid shake up in area

ARCM is the biggest lender to Premier Oil. It also has a short position in the company’s shares meaning it will benefit from a fall in the price.

ARCM said yesterday the recent fall in oil and gas prices meant Premier would generate less cash than expected from the production it expects to acquire while the economic lives of the assets would be shorter than expected.

“These acquisitions were negotiated in the autumn of 2019 using forward prices of around $70/bbl for Brent and 50p/therm for UK gas,” said ARCM yesterday. “We believed these estimates were unrealistic at the time and are even more unrealistic today.”

Premier’s share price has plunged to 12.62p from around 67p on Thursday last week.

The company has $465m cash and undrawn borrowing facilities available to help it cope with any challenges it may face.

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Premier won the required backing for the acquisitions and a related extension of its borrowing facilities from creditors in February.

The company will seek the approval of the Court of Session in Edinburgh for the related schemes of arrangement next week.

If Premier wins court sanction it would require shareholder approval to go ahead with the acquisitions.

Separately, Tullow Oil, which developed a significant North Sea presence but is now focused on Africa, said it planned to shed around 300 jobs to help it cut costs.

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The group posted a $1.7bn annual loss yesterday after cutting the valuation of its assets by $781 million. This reflected a reduction in the company’s long-term oil price assumption to $65/bbl from $75/bbl.

The company provided an extra $22.7m for the expected cost of decommissioning its remaining North Sea assets, from which production cased in 2018.

It employs around 950 people currently.