Premier Oil plc (PMOIY) shares surged the most in nearly 18 months Wednesday after revealing a major crude discovery that could add significantly to its proven reserves.
The oil explorer, and one time activist target, holds a quarter share in the Zama 1 oil field near Mexico, where drillers say they just found more than a billion barrels of oil lurking beneath the seafloor. Under the current split of the license, the find could mean that Premier is able to add more than 250 million barrels to its proven reserves.
Premier Oil stock surged 36% to trade at an intraday high of 62.75 pence, the biggest one-day gain since February 2016 and its highest level since the end of May, before paring gains to around 57.5 pence each by 08:45 London time.
"We have encountered a very substantial oil bearing interval which indicates over 1 billion barrels of oil in place, a commercial standalone development which adds materially to Premier's portfolio of assets worldwide.," said CEO Toby Durrant, "It is particularly pleasing that our strategy of focusing our exploration portfolio on high impact opportunities in proven but under-drilled basins has led to this world class discovery with our first well in Mexico."
Wednesday's move will be welcomed by both creditors and shareholders alike as both suffered during a debt restructuring and refinancing that was implemented earlier this year.
The company had a $2.3 billion debt pile that it had found increasingly difficult to sustain in a low oil price environment and sought a refinancing and restructuring.
Premier received the backing of all of its creditors at the end of June to go ahead with a proposal that will see convertible bondholders swap thier debt for new stock, alongside some other creditors, which means the issuance of up to 90 million new shares.
The approved refinancing and restructuring could be implemented as soon as July 18, although getting to this point has not been plain sailing for the London listed company.
In March it fell foul of an activist investor who had bought heavily into the company's convertible bonds after spying an opportunity to force Premier into offering creditors a better conversion price.
The Hong Kong-based Pyrrho Investments said it could lead a rebellion of convertible bondholders against the company and scupper the restructuring entirely however, it failed to secure the necessary backing among other lenders and in May, was reported by The Deal to have reduced its holding in the convertible bonds.