Premier Oil cuts costs and raises production outlook
Premier Oil has upgraded its production outlook for the year after reporting record output in the first half.
The heavily indebted explorer said that it produced just over 82,000 barrels per day (bpd) in the six months to June, up more than a third on the same period last year thanks to high production efficiency and the acquisition of North Sea fields from Eon.
It said that its full-year production could average 80,000 bpd, up from previous guidance of 75,000 bpd.
Premier is preparing to start producing from its Catcher field in the North Sea. It now expects the field to produce a “plateau” rate of 60,000 bpd, up from 50,000 bpd previously expected.
Progress on Catcher had been “excellent” and the floating production, storage and offloading vessel that will be used has been made in Singapore and is due to set sail imminently.
The company, which has just been through a lengthy debt restructuring, said that it had started to pay down its debt. Cash flows were $292 million, up from $108.7 million a year earlier. Net debt edged down to $2.74 billion, from $2.77 billion at the end of 2016.
This week it confirmed plans to sell its stake in the Wytch Farm onshore oil field in Dorset for $200 million.
Oil companies have sought to slash their operating costs to cope with persistently low crude prices and Premier reported a further 11 per cent drop to $14.70 per barrel.
Premier has a number of potential developments, including the Tolmount gas field in the North Sea and Sea Lion oil field in the Falklands, but it is looking for ways to reduce development costs. It said that it had signed a heads of terms agreement with a partner for Tolmount which would reduce its share of capital expenditure to $100 million.
Last month it was buoyed by a “world-class” oil discovery off Mexico; it says that initial estimates suggest that between 400 million and 800 million barrels of oil might be recovered.
Its shares edged ¾p lower to close at 56p.