5th Mar 2020 09:16
(Alliance News) - Premier Oil PLC reported on Thursday a year of significant progress, though higher charges have led to a decline in profit.
Premier's revenue climbed 13% in 2019 to USD1.58 billion, but pretax profit fell 35% to USD102.5 million due to USD757.9 million of depreciation, depletion and amortisation costs, much higher than a year before.
Production in 2019 averaged 78,400 barrels of oil equivalent per day, at the upper end of guidance. This is 2.6% lower than 2018's figure, and in 2020 Premier sees production between 70,000 barrels a day and 75,000 barrels a day.
However, this does not include any potential contribution from acquisitions in the UK North Sea. In early January, Premier announced the USD820 million purchase of the Andrew Area and Shearwater assets from BP PLC as well as an increased stake in its existing Tolmount asset.
Well over half of Premier's production in 2019 came from the UK North Sea, though it also had producing fields in Pakistan, Vietnam, and Indonesia, though Pakistani assets were sold in March 2019.
Premier reduced net debt at the end of 2019 by 15% year-on-year to USD1.99 billion, and a focus going ahead will be to keep trimming this figure. Free cash flow in 2019 was a "record" USD327 million, 30% higher than 2018.
"2019 was another year of strong operational and financial delivery by Premier with significant progress made against the company's strategic objectives," said Premier.
"Commodity prices were slightly weaker during 2019 driven by global trade tensions and ongoing concerns about the balance of supply and demand. Despite this, the group reported record free cash flows and increased net profits."
Looking ahead, the Tolmount project is on track for first gas by the end of 2020, underpinning Premier's medium-term growth plans.
Premier also noted the steep fall in the oil price so far in 2020 due to the coronavirus outbreak, commenting: "The current volatile macro environment serves to highlight the importance of the business being sustainably free cash flow positive and ensuring that future growth can be funded through the commodity price cycle without compromising the balance sheet.
"The group's immediate priority remains to reduce its debt levels and covenant leverage ratio towards 1 times, a process which will be accelerated by the acquisition of the UK assets announced post period-end. At the same time, Premier will continue to maintain its capital discipline investing selectively in new international projects and exploration to create material value for all of its stakeholders over the longer term."
Shares were 5.2% lower on Thursday morning in London at a price of 74.96 pence each.
In a separate announcement, Premier said Elisabeth Proust will be joining as a non-executive director. She has spent 35 years at French oil major Total SA, including being managing director of Total's UK, Indonesia, and Nigeria subsidiaries.
By George Collard; [email protected]
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