NORTH Sea oil and gas companies have underlined their determination to expand in the area as the turmoil in the market intensified.

Brent crude fell around ten per cent yesterday afternoon, amid concern about the impact of the Covid-19 coronavirus on demand and the prospect of a long price war between Saudi Arabia and Russia.

The fall took the price below the key $30 per barrel level in afternoon trading. Brent last fell that low in January 2016, during a slump that took a heavy toll on the North Sea.

The price has now fallen by around 40 per cent since talks between Saudi Arabia and Russia about a plan to curb output to offset the impact of Covid-19 on demand collapsed ten days ago.

However, Premier Oil will seek the approval of the Court of Session in Edinburgh today for plans that will result in a big increase in its already significant presence in the North Sea.

Jersey Oil and Gas hopes to regain the momentum behind a bold field development plan after a major appeared to lose interest in it.

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London-based Premier is seeking court approval for its plan to acquire stakes in three big North Sea fields for up to around $900m, and related funding arrangements.

A rebel investor in Premier hopes to persuade the court to block the schemes of arrangement that will be used to implement the plan.

Asia Research and Capital Management (ARCM), which is Premier’s biggest creditor, has opposed the company’s North Sea expansion plan since it was announced in January.

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

The hedge fund has always reckoned the acquisitions were based on over-optimistic assumptions and that Premier should focus on reducing its debts. ARCM says the fall in the crude price this month has made the plan even riskier.

It is expected to focus on legal considerations regarding the treatment of creditors in schemes of arrangement although Premier won resounding backing for its plans from other creditors in February.

ARCM also has a short position meaning it will benefit from a drop in Premier’s share price.

This has fallen from 79.08p on March 4 to 16.34p.

Premier has insisted the acquisitions make commercial sense. On Friday the firm said its existing North Sea assets were performing well.

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The company noted then it had $465m of cash and undrawn borrowing facilities.

Premier said that by reducing planned capital spending by $100m it could break even in cash terms if Brent sold for $35/bbl for the remainder of the year.

It has signalled that it may decide not to proceed with all three acquisitions announced in January.

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

The company agreed then to buy stakes in the Andrew and Shearwater assets from BP and an interest in the Tolmount field from Korean-owned Dana Petroleum.

Meanwhile Jersey Oil and Gas has agreed to collaborate with a range of firms to investigate plans to develop a major production hub in the Moray Firth.

Jersey wants to bring the bumper Buchan field back into production as part of a wider area development that would include the Verbier find, which it made with Norwegian oil giant Equinor.

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The find generated huge interest when it was made in 2017, as the industry grappled with the fallout from the sharp fall in the crude price from the summer of 2014.

The price regained some ground after major exporters including Russia and Saud Arabia agreed late in 2016 to curb production to support the market. The curbs were subsequently deepened and the deal looked set to be extended again until this month’s spat between Russia and Saudi Arabia.

The excitement about Verbier cooled after Jersey announced disappointing appraisal results in April last year.

In January Equinor sold its 70% interest in Verbier to Jersey in a low-cost deal, after previously spurning an opportunity to buy into a wider Buchan area project.

The firms Jersey will collaborate with on the Greater Buchan study include Zennor Resources and Ping Petroleum, which have stakes in undeveloped discoveries in the area.

The North Sea regulator welcomed news of the collaboration agreement.

The Oil and Gas Authority said collaboration was a key component of its vision for Greater Buchan Area when it completed a supplementary licensing round covering the area in 2019.