Premier Oil boosts full-year 2016 production guidance

The deal includes a 5.2% stake in the Total-operated Elgin-Franklin gas-condensate field, 25% of the Huntingdon and 47% of the Babbage fields in both of which Premier will assume operatorship from E.ON, and 50% of the 0.2 trillion to 1 trillion ft³ Tolmount gas discovery now also to be Premier-operated.

In the first half, production averaged 61,000 boepd, with “production efficiency” measured at 93%, and Premier Oil highlighted recent company record production levels in excess of 95,000 boepd.

United Kingdom sales were $53.6m lower year-on-year as the impact of the sustained downturn in the global oil price was felt.

CEO Tony Durrant said the results showed the “step change in production levels and a leaner operating cost base” that had addressed “the lower commodity price environment”. Solan is already producing strong oil flows and Catcher is due to begin production next year.

Mike Welton, Premier’s chairman, said today: “Given the unsecured nature of our debt arrangements and the number of parties involved it is not surprising that negotiations will take time to conclude but I am encouraged by the progress that has been made to date”.

“We have made substantial progress with our lending group on the principal terms of a refinancing”, he explained.

FTSE 250-listed Premier also emphasised that it was moving out of a period of “sunbstantial investment” and towards one of positive cash flows.

Premier Oil, the indebted North Sea producer that remains locked in talks with banks about a $2.6 billion debt restructuring, expressed optimism yesterday that a deal could be struck next month.

“Our priority for that cash flow is to deleverage our balance sheet while continuing to ensure the integrity of our assets and to deliver our Catcher project”.