14th Jan 2015 07:59
LONDON (Alliance News) - Premier Oil PLC Wednesday said production and revenue increased in 2014 and said it has hedged around 40% of its production for 2015 to protect itself from the weak oil price, but said it has deferred all exploration in 2015 that it is not already committed to.
Production during 2014 averaged 63,600 barrels of oil equivalent per day, up 9.3% compared to the 58,200 barrels of oil equivalent produced per day in 2013. The company saw production increase in Indonesia, Vietnam and the UK, slightly offset by production decreasing from its assets in Pakistan and Mauritania.
Premier generated total revenue of USD1.6 billion in 2014, a rise from the USD1.5 billion a year earlier, with capital expenditure totalling USD1 billion plus a further USD160 million on exploration.
In 2015, Premier's capital expenditure will be around USD600 million, representing a 40% reduction, with its exploration budget slightly increasing to USD220 million in 2015.
Premier has deferred all exploration expenditure it has not already committed to during 2015. The company plans to drill a total of eight exploration wells during the year. Drilling will be done in Kenya and on the Falkland Islands, which will begin in March, alongside Premier's first test well in offshore Norway, which will spud in the middle of the year.
The average oil price achieved during 2014 was USD98.2 per barrel before it hedged some of its production. After hedging production, the average price increased to USD101 per barrel. In Indonesia, Premier achieved an average gas price of USD15.6 per million cubic feet of gas and USD4.6 per million cubic feet of gas from production in Pakistan.
For the 2015 year, the company has hedged 5.4 million barrels of oil and 84 billion tonnes of high sulphur fuel oil at an average price of USD98.3 per barrel and USD614.4 per million tonnes respectively. This represents around 40% of the company's production from its existing producing assets.
Premier is expecting oil production from its existing producing assets during 2015 to average around 55,500 barrels of oil equivalent per day. The guidance has been lowered to take into account the impact from the sale of the high cost producing Scott area in the North Sea and some natural decline in the company's portfolio.
The production guidance in 2015 does not include the Solan field, which is expected to begin producing in 2015. A more accurate forecast on total production will be made dependent on the timing of first oil from the Solan field.
At December 31, Premier have spent a total of USD1.4 billion on the Solan project. Premier is funding it's partner's share of capital expenditure in return for 100% of the field's cashflows once on-stream until it has repaid a loan to the partner, it said in a statement.
Premier is speaking to the partner, Chrysaor, over the partial refinancing or sale of the loan. At the end of 2014, the outstanding loan and interest stood at USD547 million.
The company is expecting to begin construction at the Catcher project in the second half of the year with the floating production facility being built in Japan. The project is on schedule and on budget, said Premier.
By Joshua Warner; [email protected]; @JoshAlliance
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