11th May 2016 07:33
LONDON (Alliance News) - Premier Oil PLC Wednesday said production has fallen from levels seen in 2015, but said full-year production could come in above its guidance as the company also said it has managed to cut costs and its capital expenditure budget once again.
"Strong production performance from our existing assets, together with the contribution from the E.ON assets and the Solan field means that we now expect production for the year to be better than we originally anticipated," said Chief Executive Tony Durrant.
Premier Oil said oil production in the first four months of the year averaged 57,300 barrels of oil equivalent per day, falling from 60,200 barrels of oil per day in the corresponding period a year earlier.
Production is also slightly lower than the average production rate over the whole of 2015 of 57,600 barrels per day.
Two of the company's four geographical regions provided production growth in the first four months of the year, with its UK North Sea assets reporting an increase following the acquisition of a string of assets in the area from E.ON and Indonesia reporting a smaller rise as the Natuna Sea Block A delivered results ahead of expectations.
UK production averaged 17,600 barrels per day compared with 16,100 barrels a day a year ago.
Production from Indonesia in the first four months of the year rose to 14,000 barrels a day from 13,200 barrels, whilst production from Pakistan and Mauritania dropped to 8,300 barrels a day from 10,900 barrels a day. The last segment, Vietnam, also saw production decline to 17,400 barrels from 20,000 barrels a day.
Still, Premier Oil is confident it can "deliver at or above upper end" of its full-year guidance of 65,000 to 70,000 barrels of oil equivalent per day - with production set to significantly increase later this year.
One major contributor to the anticipated production growth this year will be its Solan development in the UK North Sea, which began producing in the middle of April. The field is expected to be producing 20,000 to 25,000 barrels a day in the second half of the year, slightly later than originally planned.
Currently, Solan is producing over 14,000 barrels of oil equivalent per day from only one producing well, with a second well expected to come online in the middle of this year.
Premier Oil's other major development project in the UK North Sea, Catcher, remains on schedule to begin producing next year. Importantly, Premier Oil said the total capital expenditure required for the project to get it to first oil has been reduced by a further 15%.
In addition, group operating costs and its general and administrative expenses have also continued to fall, and are set to come in 10% to 20% below the company's budget for 2016, it said.
Premier Oil shares were up 0.9% to 70.39 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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