16th Jan 2014 09:27
LONDON (Alliance News) - Premier Oil PLC Thursday said it expects higher sales from 2013 as total production increases, but noted that profits will be hit by impairments.
The UK-based exploration and production company said that it expects total revenues for 2013 to be in the order of USD1.5 billion, higher than last year's USD1.4 billion.
However, the company said profits for the full year will reflect updated future abandonment costs and related non-cash impairment costs. Premier Oil plans to record an estimated additional USD50 million charge in the second half of the year for the impairment of its B-Block.
The company said its estimated full-year total production is 58,200 barrels of oil equivalent per day, a slight increase on its 57,700 barrels per day the previous year. It said a 19% UK production increase to 14,900 barrels of oil equivalent per day offset falls in production in Indonesia, Vietnam and the rest of the world.
Premier Oil said it reached an average production rate of 23,000 barrels of oil equivalent per day at its UK operations during December as the Rochelle field was brought into production, along with two new production wells. It also said the Wytch Farm site continued to outperform.
The company said a damaged gas pipeline hit operations in Vietnam during the year, and field decline led to lower production rates in Pakistan.
However, the company noted that following the installation of new equipment in Vietnam, the Dua development expects first oil in the third quarter. In Indonesia, the Pelican and Naga platforms were successfully installed at the end of 2013, and development drilling is expected to commence in the second quarter with first gas expected in the second half of 2014.
In the North Falkland Basin, the company has completed a concept selection process for the Sea Lion Development with its joint-venture partner Rockhopper Exploration PLC. Premier recommended that a tension leg platform be raised at the site and indicated that its final investment decision for the site is likely to be taken in the first half of 2015.
In a separate statement, Rockhopper said it continues to expect first oil production three and a half to four years after the project is sanctioned, and noted that four firm exploration slots for the joint venture with Premier Oil have matured to drillable status and a rig tender process is underway.
Rockhopper expects a contract to be awarded in the first half of this year and the first well to go into test production in late 2014 or early 2015.
Premier Oil said its estimated average oil price realised for 2013 was USD109.0 per barrel, compared to USD111.4 per barrel in 2012.
The company said it anticipates announcing its recommended dividend for the year 2013 in conjunction with its preliminary results announcement on February 27.
For 2014, Premier Oil said it has taken advantage of the relatively strong crude market conditions, forward selling roughly 26% of its estimated 2014 production at an average of USD103.5 barrel of oil equivalent.
Premier Oil also said it plans to drill 13 wells in 2014, targeting more than 160 million barrels of oil equivalent of net unrisked prospective resources.
"2013 was a challenging year for Premier and the wider industry as a whole. It is however pleasing that production reached record levels towards the end of the year, that four new projects will achieve first oil and gas in 2014 and that our mid- to longer-term projects, including Bream, Catcher and Sea Lion, have taken significant steps forward," Chief Executive Simon Lockett said.
Premier Oil separately announced that Neil Hawkings has been appointed to the role of director, Falkland Islands, in order to oversee the execution of the Sea Lion development project, and Garry Stoker has been promoted to the company's executive committee in the role of development and operations manager to take over Hawkings' previous functional responsibilities.
Premier Oil shares were down 6.1% to 289.10 pence, putting it in the top three FTSE 250 losers in early trading Thursday, while Rockhopper shares were down 2.6% to 152.00 pence.
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
PMO.LRockhopper