The amendment to the terms of the deal comes in the wake of the sharp fall in oil prices since the deal was struck in January.
Premier had initially agreed to pay a cash sum of $625 million (£495m) for the assets in the Andrew and Shearwater areas but that has now been reduced to $210m.
BP will now keep $300m of cash flows from the effective date of the deal of 1 January 2019 with another $115m only payable by Premier dependent on higher future oil and gas prices.
Estimated revised abandonment obligations for Premier have also been reduced to about $240m, from about $600m.
The price cut has also seen the company reach a settlement agreement with its largest creditor Asian Research & Capital Management (ARCM), which had been urging the company to abandon the acquisition which it said risked the prospect of Premier running out of money.
Under the agreement with ARCM, the investor will be issued with 82.2m shares, representing an 8.9 per cent stake in the company, at 26.69p per share.
Premier also said it was in talks with creditors to waive its financial covenants through to 30 September while it continues discussions with lenders.
The Andrew assets, which lie 140 miles north-east of Aberdeen, comprise the Andrew, Arundel, Cyrus, Farragon and Kinnoull fields. The deal also includes BP’s 27.5 per cent stake in the nearby Shell-operated Shearwater field.
Premier said the acquisitions will strengthen its business through the addition of low cost, producing assets.
“The Andrew area and Shearwater assets, which will contribute to rising group production, are immediately cash generative even at current commodity prices and will accelerate the use of Premier’s $4.1bn of UK tax losses,” it said.
Premier added that the additional free cash flow generated will accelerate debt reduction and the deleveraging of its balance sheet.
Stuart Lamont, investment manager at Brewin Dolphin in Aberdeen, said the news will come as “welcome relief” to Premier Oil shareholders.
“While the transaction looked viable prior to the Covid-19 crisis, the subsequent collapse in the oil price brought a higher degree of uncertainty,” he said.
“The re-negotiation also relieves some of the pressure on the company from one of its largest shareholders. The new terms should help Premier – already sitting on a large debt pile – better manage the costs involved, without adding more stress to its balance sheet.”
Sam Wahab at SP Angel added that the new terms will result in “much less stress on what is already a fragile balance sheet”.
A message from the Editor:
Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.
With the coronavirus lockdown having a major impact on many of our advertisers - and consequently the revenue we receive - we are more reliant than ever on you taking out a digital subscription.
Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. With a digital subscription, you can read more than 5 articles, see fewer ads, enjoy faster load times, and get access to exclusive newsletters and content. Visit https://www.scotsman.com/subscriptions now to sign up.
Our journalism costs money and we rely on advertising, print and digital revenues to help to support them. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.