Private equity-backed Chrysaor has agreed on a reverse takeover of Premier Oil, the firms said on Tuesday, creating the British North Sea’s largest oil and gas producer at a time the sector is facing a sharp decline in demand. The deal, which will see Premier’s creditors paid $1.23 billion in cash, will fold one of the world’s oldest independent producers into a private equity-backed group, in which Premier shareholders will receive an expected 5.45% stake. Chrysaor’s largest shareholder, Harbour Energy, is expected to own just over 39% of the merged company, which will stay listed on the London Stock Exchange. The deal still needs approval by regulators and Premier’s creditors and shareholders. The combined group, which will have a new name, will be run by Harbour Chief Executive Linda Cook, while Chrysaor CEO Phil Kirk will be head of its European business. Current Premier CEO Tony Durrant will not have a role in the group. Premier Oil shares were up about 7% by 1053 GMT at 16.22 pence, but are still down 84% in the year to date. Benchmark Brent crude oil prices have fallen as low as $16 a barrel this year as the coronavirus sapped global oil demand. Premier, which traces its history back to the 1930s, underwent debt restructuring in 2017 after the last oil price collapse. It currently has net debt of $1.9 billion and had a market capitalisation of $182 million before the announcement. “The (Premier) Board intends to recommend unanimously this transaction to shareholders,” Premier chairman Roy Franklin said. Creditors, whom the companies’ spokesmen said will get between 70 and 80 cents on each dollar owed, will also own shares in the new group. Overall, Premier stakeholders will own not more than 23%. Chrysaor, backed by private equity firms Harbour and EIG, has become a major North Sea producer by buying up British fields from Royal Dutch Shell and ConocoPhillips, spending about $5.7 billion since 2017. Kirk said while the group, unlike other private equity-backed producers in the basin, had not yet paid out its owners any “meaningful” amount, the plan was to start paying dividends with the merged group. Chrysaor produces just under 200,000 barrels of oil equivalent per day (boe/d). Combined with Premier’s output of around 70,000 boe/d, it would become be the biggest oil and gas producer in the British North Sea, topping BP and Shell. Premier also brings to the table a 25% stake in Mexico’s Zama shallow-water offshore project, as well as production in east Asia.