25th Feb 2016 09:03
LONDON (Alliance News) - Premier Oil PLC on Thursday reported a much wider loss in 2015 after the company booked more impairments and experienced a drop in revenue thanks to the fall in oil prices, but it is set to unleash a series of new producing assets this year.
The company is finalising a deal to acquire a string of UK North Sea assets from E.ON and is expecting oil production to begin at its Solan project imminently, leading to a material boost to production in 2016.
However, like the wider oil market, Premier has suffered from falling energy prices and a deteriorating environment as the company reported a pretax loss of USD829.6 million in 2015, widening from the USD362.5 million loss in 2014.
That was a result of revenue falling to USD1.06 billion from USD1.62 billion, with lower production levels in 2015 exacerbating the effect of lower prices. A rise in impairment charges to USD1.02 billion from USD784.4 million, alongside significantly higher exploration costs, also contributed to the wider loss in the year.
Production in 2015 averaged 57,600 barrels of oil equivalent a day, ahead of the company's guidance but still lower than the 63,600 barrels being produced per day last year. However, production in 2016 is expected to rise to the region of 65,000 to 70,000 barrels a day thanks to the addition of the E.ON assets and the start of production from Solan.
Importantly, Premier Oil has around 30% of the anticipated production in 2016 hedged at a price of USD73.4 per barrel, which is substantially above current spot prices.
Premier's other two big development projects, Sea Lion offshore the Falkland Islands and the Catcher project in the UK North Sea, both remain on schedule, and Premier said Catcher remains under budget whilst the economics at Sea Lion have been improved.
Premier lowered its operating costs by 25% in 2015 and said it will continue to lower costs this year, whilst capital expenditure this year will experience a "significant reduction," it said.
Premier Oil shares were down 4.4% to 39.45 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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