16th May 2018 10:27
LONDON (Alliance News) - Premier Oil PLC said Wednesday its full year guidance for the number of barrels of oil equivalent per day it produces will be maintained despite its first quarter production falling.
For the period ending March 31, the total thousand barrels of oil equivalent per day fell to 74.0 from 81.2 the year before. This is due to the sale of Wytch Farm, the planned shutdown of the Huntington field and the "natural decline" of Permier's portfolio.
The oil company is forecasting "significant" debt reduction in the second half of 2018. Premier reduced its debt to USD2.65 billion at the end of the quarter from USD2.72 billion at the end of 2017.
The increasing free cash flow generation from its portfolio, reduced capital expenditure and cash proceeds from recent sales will further help reduce the debt according to Premier. At current oil prices, the company's covenant leverage ratio is expected to fall to three times earnings before interest, tax, depreciation and amortisation by the end of the year and reducing further in 2019.
In the UK, Premier's production averaged 38.1 thousand barrels of oil equivalent per day, down from 43.9 the year before. This reflects the Catcher Area production rate of 8.5 thousand barrels of oil equivalent per day. Gross oil production from Catcher reached 60 thousand barrels of oil per day "in the last few days".
With the Catcher Area now producing, the Premier's UK assets are currently in excess of 50 thousand barrels of oil equivalent per day. The drilling programme for the area is expected to be complete during the third quarter of the year - with the development well encountering "significantly" more oil bearing sands than originally prognosed".
Chief Executive Tony Durrant said: "The improved commodity price environment puts us in a strong position to generate significant free cash flow in the second half of the year: the underlying production portfolio is robust, Catcher has reached 60 kbopd, our low cost base has been maintained, capital spend is reducing and we have announced further non-core disposals. We are on track to deliver our plan of material debt reduction in 2018 and 2019 with selective investment in our future growth projects from 2020, once balance sheet strength has been restored."
Shares in Premier Oil were down 3.5% Wednesday morning to 106.64pence each.
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