13th May 2015 09:23
LONDON (Alliance News) - Premier Oil PLC shares rose on Wednesday after it said production was ahead of the company's guidance despite falling across all of its portfolio except in Vietnam in the first quarter, but the FTSE 250 explorer and producer reiterated its full-year guidance and said it will focus on reducing costs for the rest of the year.
Premier shares were up 5.4% to 190.30 pence per share on Wednesday morning.
Premier said production averaged 60,200 barrels of oil equivalent per day in the first quarter of 2015, down from 65,800 barrels per day a year earlier. The fall was due to the sale of the Scott area in the UK North Sea and some natural decline across the portfolio.
Production in the quarter fell to 13,200 barrels per day in Indonesia from 14,200 barrels, whilst UK production dropped to 16,200 barrels from 20,400 barrels a year earlier. Production from Pakistan and Mauritania also fell, to 10,900 barrels per day from 14,100 barrels. Production from Vietnam was the only area to experience a lift, rising to 20,000 barrels per day from 17,100 barrels.
Premier reiterated its full-year guidance at 55,500 barrels of oil equivalent per day, lower than current production levels due to planned maintenance to be carried out in the summer. The guidance excludes new production from the Solan field.
That guidance had been lowered in January to 55,500 barrels to reflect the sale of the Scott area and the decline in production.
Premier said the plateau production from the Solan field is expected to be between 20,000 to 25,000 barrels of oil per day once production begins. A total of USD1.5 billion has been spent on the project in total.
The company said it has made "improved progress" on the completion and commissioning of the Solan project in the UK and said first oil is still targeted for "later this year", whilst first oil from the Catcher project, also in the UK, is still scheduled for 2017.
Premier's 2015 cash flows are protected by a hedging programme with 5.6 million barrels of oil and 120,000 metric tonnes of high-sulphur fuel oil hedged at an average price of USD97.8 per barrel and USD532.6 per metric tonne, respectively.
Development capital expenditure, excluding the Solan project, is expected to total USD750 million in 2015. Funding for the Solan project is currently being discussed with Premier's partner on the project, Chrysaor, it said. Exploration expenditure for 2015 will total USD220 million, which is in line with its previous guidance.
The first quarter of the year saw a strong start to Premier's four-well Falkland Islands campaign with an oil and gas discovery at Zebedee, which will add resource to subsequent phases of the Sea Lion development. The Isobel Deep well, the second well of the campaign, spudded in early April and the results of that well are expected by the end of May.
In Indonesia, the Anoa Deep appraisal well spudded on April 21. The well is designed to test the extension of the Lama reservoir to the west of the Anoa Deep discovery made in 2012. The results of the well are expected before the middle of 2015. The potential play-opening Myrhauk well on the Mandal High in Norway is still scheduled to be drilled in the third quarter.
"We have achieved a strong start to the year notwithstanding oil price volatility. Year to date we have delivered a robust production performance, progressed our development projects, achieved exploration success in the Falklands and actively managed our cost base," said Chief Executive Tony Durrant.
"Our focus remains on delivering our committed projects and managing our balance sheet while maintaining optionality in the portfolio for future growth as the oil price recovers," Durrant added.
At the end of April, net debt stood at USD2.2 billion, broadly flat from a year ago with cash of USD190 million and undrawn credit facilities of USD1.1 billion.
By Joshua Warner; [email protected]; @JoshAlliance
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