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UK oil and gas explorer Premier Oil said it has taken another significant step towards completing its refinancing by the end of May, as it succeeded in narrowing its losses last year.

The company, which is one of the biggest independent operators in the North Sea, has for almost a year been in talks with its lenders to try and renegotiate its hefty debt pile, which stood at $2.8bn at the end of December. In February, it finally announced it had agreed terms with key lenders.

On Thursday, the company reported further positive progress as a required number of banks have now signed lock-up agreements, which will commit them to vote in favour of the refinancing.

The company provided an update on its refinancing as it posted results for 2016, which showed losses before tax narrowed to $390.6m from $829.6m a year earlier on revenue of $983.4m, down from $1.1bn in 2015.

After tax, Premier actually returned to a profit of $131.4m from a $1.1bn loss in 2015. However, this was lower than analysts’ expectations of $138m. The company booked a hefty $652.2m impairment charge against its Solan field in the North Sea as it reduced its estimate for the reserves that can be recovered from the field over its life.

Premier’s shares have remained volatile in recent weeks as nerves over the refinancing have persisted. One holder of its convertible bonds, Hong Kong-based Pyrrho Investments, earlier this month expressed its “deep dissatisfaction” with the terms offered.

But Tony Durrant, chief executive of Premier Oil, on Thursday reassured investors that the process is moving towards completion in May, saying: “Based on the support now received, we can look forward to completion of the refinancing.”

Premier Oil was pushed into a refinancing last year as a condition of its purchase of all of German utility Eon’s North Sea oil and gasfields.

Like many other independent oil and gas explorers, Premier Oil has built up a hefty debt pile as it pressed ahead with capital intensive projects during the last few years at the same time as oil prices were slumping.

Premier is preparing to enjoy the fruits of one of its major investments later when its Catcher field in the North Sea is due to produce first oil.

The group has been battling to keep its costs under control. Operating costs last year were $15.8 per barrel of oil equivalent, which, although up from $15.5 a year earlier, was “significantly below budget”, it said.

Commenting on the results, analysts at Davy Research said:

Premier Oil’s 2016 results were largely in line with earlier guidance and contained no real surprises. A separate announcement that it had entered into lock-up agreements with up to 87% of its various lender groups should please, but overall re-financing worries are likely to linger until the process completes in May.

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