7th Mar 2019 08:45
LONDON (Alliance News) - Shares in Premier Oil PLC climbed early Thursday as the company said it has swung to a profit in a successful 2018.
The stock was up 6.2% at 78.45 pence in London.
Premier posted a USD133.4 million pretax profit in 2018, after a pretax loss of USD253.8 million a year prior.
The FTSE 250 energy firm's revenue climbed to USD1.40 billion from USD1.04 billion, helped by higher production and oil prices.
Production in 2018 was a record 80,500 barrels of oil equivalent per day, after 75,000 barrels in 2017, though guidance in 2019 is for output to fall back again to 75,000 barrels of oil equivalent per day.
However, adjusting for disposals, that would be a 5% year-on-year rise.
The average oil price for the company in 2018 was USD71.4 per barrel, from USD54.2 per barrel in 2017, and prices have strengthened so far in 2019. Brent was quoted at USD66.20 early Thursday.
Premier's cash flow from operations in 2018 surged 64% to USD777.2 million, with capital expenditure coming in below forecasts at USD353 million.
Net debt has been reduced by USD393 million to USD2.3 billion, and Premier expects to reduce this by a further USD250 million to USD350 million in 2019.
Operating expenditure was USD10 per barrel of oil equivalent, with Premier maintaining what is said is low cost base.
"2018 saw higher production, positive free cash flow and a return to profitability. The group is ahead of plans to restore balance sheet strength and remains focused on consistently delivering free cash flows," said Chief Executive Tony Durrant.
"Growth projects such as Tolmount, Zama and Sea Lion, together with promising exploration in Mexico and Indonesia, are being advanced within a disciplined financial framework."
Premier's main production comes from the UK, Indonesia, and Vietnam.
In the UK, over half of overall output, production climbed to 46,800 barrels of oil equivalent per day from 39,500 barrels, as Premier ramped up the Catcher oil field.
Output in Indonesia dipped slightly to 13,200 barrels of oil equivalent per day, from 14,100 barrels, while Vietnam rose to 15,200 barrels from 14,900 barrels. In Pakistan, production was 5,300 barrels a day from 6,500 barrels.
Looking to 2019 guidance, Premier expects opex and capex to be USD13 per barrel and USD340 million respectively.
It expects sanctions for Catcher field extensions in the first half of 2019, with appraisal programmes at the Zama and Tolmount East programmes in Mexico and the North Sea respectively to complete in the third quarter.
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