26th Feb 2015 08:23
LONDON (Alliance News) - Premier Oil PLC Thursday joined peers in the sector by slashing its planned expenditure and reporting large writedowns due to the slide in oil prices, and the company also suspended its full-year dividend payment for the same reason as it looks to preserve its balance sheet.
The sector has been rapidly scaling back investment plans in the wake of the slide in oil prices, and Premier Oil is no exception. The Brent oil price has dropped to about USD61 a barrel, from over USD115 a barrel last June.
Premier said it has budgeted for "significant cost reductions" in 2015 by making savings in operating costs, reduced general and administrative spend, and the re-phasing of capital expenditure.
That came after it reported a pretax loss of USD210.3 million for 2014, compared with a USD234.0 million profit in 2013, as it booked a USD784.4 million impairment on its oil and gas properties to account for the oil price fall.
Its revenue actually grew to USD1.6 billion, from USD1.5 billion, after it reported "record" production of 63.6 thousand barrels of oil equivalent per day, up 9.3% on the year and above the upper end of guidance. It also produced "record" operating cash flow of USD924.3 million, up from USD802.5 million in 2013.
"In 2015, we will continue to optimise our stable production base, push forward with approved developments and anticipate adding to our substantial resource base with targeted exploration. This can be achieved while re-setting the cost base to a new low oil price environment. These actions will position Premier as a well-financed low cost producer with significant undeveloped resources and acquisition capacity, highly leveraged to a future recovery in oil prices," Chief Executive Tony Durrant said in a statement.
"As we enter 2015 with a significantly lower oil price than in recent years, the board believes it is not prudent to propose a dividend payment for the full year or, as previously announced, to continue with the share buyback programme. Our focus in the near-term is on preserving cash, maintaining access to liquidity and reducing gearing levels while continuing to invest in our sanctioned development projects. We would expect to revisit our decisions around shareholder distributions should the oil price recover above our long term planning assumption," Chairman Mike Welton added.
Premier Oil shares were down 0.7% at 172.70 pence early Thursday.
By Steve McGrath; [email protected]; @stevemcgrath1
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