Completion of Babbage sale & operations update

Premier Oil PLC

("Premier" or "the Group" or "the Company")

Completion of the Babbage Area sale & operations update

7 December 2018

Completion of the Babbage Area sale

Premier is pleased to announce that following receipt of necessary approvals, the sale of its interests in the Babbage Area to Verus Petroleum SNS Ltd (Verus) has now completed.

Premier has received £30.3 million ($38.7 million), after adjustments for Babbage cash flows collected by Premier since the effective date of 1 January 2018. In addition, Verus will take on exploration commitments valued at c.$24 million. Production from Babbage has averaged 2.5 kboepd year to date.

The sale proceeds will be used to pay down the Company's existing debt.

Production update

Group production year to date has averaged 79.4 kboepd. Production in November and December to date was above forecast at 92 kboepd with a record daily production rate of 98.7 kboepd achieved on 4 December. This strong production performance has been driven by high uptime across the Group's producing portfolio, including at Premier's operated Catcher Area which has averaged 68 kboepd (gross, Premier 50 per cent) in November and December to date. 

Premier continues to forecast full year production of around 80 kboepd.

Premier has hedged over 30 per cent of its 2019 forecast oil entitlement production at an average price of $70/bbl, as per previous disclosure. 

Mexico update

On 29 November, the Ensco-8503 rig spudded the Zama-2 appraisal well, the first of the two well Block 7 Zama appraisal programme. The well will aim to confirm the oil water contact and is expected to reach the reservoir early in the New Year.

Sierra Oil & Gas, Premier's 40 per cent partner in the Block 7 Zama discovery, announced on 4 December that it is to be acquired by DEA Deutsche Erdoel AG (DEA). DEA is also the operator and Premier's 40 per cent partner in Block 30, which contains the high impact Wahoo and Cabrilla prospects, with 3D seismic acquisition planned for 2019.