UK oil and gas company Premier Oil has signed an agreement with Harbour Energy’s UK operating company Chrysaor regarding a proposed ‘all-share merger’ between Premier Oil and Chrysaor.

According to Premier Oil, the deal will create the largest independent oil and gas company listed on the London Stock Exchange (LSE) with combined production of over 250,000 barrels of oil equivalent per day.

The deal will ensure that Premier’s creditors are paid $1.23bn in cash.

Premier Oil CEO Tony Durrant said: “There is significant industrial, commercial and financial logic to creating an independent oil and gas company of this size with a leading position in the UK North Sea.

“The transaction will also provide the Combined Group with a solid foundation from which to pursue a fully funded international growth strategy.”

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Premier’s $2.7bn gross debt total will be ‘repaid and cancelled’ on completion of the transaction, which is subject to receiving necessary regulatory and shareholder approval.

Chrysaor shareholders will have at least a 77% ownership with Premier shareholders taking up to 5.45% of the combined group. Other Premier stakeholders will make up the rest of the ownership.

Harbour Energy, Chrysaor’s largest shareholder, will own approximately 39% of the combined entity.

Chrysaor CEO Phil Kirk said: “Through this deal, we will become the UK’s largest London-listed independent E&P by all key metrics.

“With our combined organisation and operatorship of a large part of our now international portfolio, we will have the ability to deliver value safely and play our part in the energy transition.”