Interim Management Statement

PREMIER OIL plc

("Premier" or "the Company")

Interim Management Statement

Premier today provides its Interim Management Statement for the period to 19th November 2010.

Premier's 2010 Preliminary Results will be announced on Thursday 24th March 2011. A Trading and Operations Update is planned for Thursday 13th January 2011.

HIGHLIGHTS

·; 2010 production guidance maintained at around 44 kboepd (2009: 44 kboepd); we reiterate our targets of 75 kboepd in 2012 rising thereafter to 100 kboepd from existing reserves and resources

·; Continuing good progress on our key Asian developments. Facilities are in place on both the Chim Sáo and Gajah Baru projects and development drilling is under way. Planned first oil and gas dates of 1st July and 1st October 2011

·; Good progress on completing commercial agreements for additional developments; contractor documentation for the Huntington project in the UK was signed on 9 November and DECC approval for the project has now been granted. In North Sumatra a 20 year PSC extension was signed for Block A Aceh, allowing the gas project to move forward with first gas targeted for 2013

·; Gas and condensate discovery at West Rochelle; hydrocarbons encountered in both vertical and sidetrack wells. Development plans will now move forward in conjunction with the adjoining Rochelle partners. Of the 11 exploration wells drilled by Premier year to date, six have been successful

·; A programme of 23 wells is planned over the next 13 months with unrisked potential of around 400 mmboe, net to Premier. This includes a farm-in well to a significant deepwater play in the Northern Red Sea

·; Bank refinancing has increased facilities available to the Group by US$470 million, at a significantly reduced margin. On completion, total facilities will stand at around US$1.8 billion

Simon Lockett, Chief Executive, commented:

"Across the Group, we continue to add value through our development and exploration activities. As we move towards our short-term target of 75,000 boepd, we also enter an extremely active exploration and appraisal programme through 2011."

16th November 2010

Enquiries

Production Operations

Production for the full year 2010 is expected to be around 44 kboepd (2009 : 44.2 kboepd). Gas demand from Singapore has remained strong and the Anoa field continued to perform well with gross production generally at current maximum rate of around 170 bbtud. Kakap production levels have improved to around 63 bbtud and 3500 bopd following significant compressor downtime during the summer months.

In Pakistan, production levels have been largely unaffected despite some flood damage to the Zamzama-1 and Zamzama North wells. All wells are expected to be back on stream shortly. Work on compression projects at the Bhit, Zamzama and Qadirpur fields is progressing well. Production in Pakistan for the full year is expected to average around 15 kboepd, net to Premier.

In the UK, a combination of extended engineering work compounded by bad weather conditions has reduced current production rates, particularly from the Balmoral field. Failure of the Emergency Shutdown Valve at the Unity platform, which links the Scott field to the Forties system, also affected production rates. The tie-in of the Burghley field to the Balmoral Floating Production Vessel has now been successfully achieved with first oil on 20th October. The Burghley field will share, on a pro-rata basis, the operating costs of the Balmoral facility resulting in a reduction in operating costs net to Premier.

In Mauritania, the Chinguetti field has continued to produce around 7500 boepd (gross), exceeding expectations.

Development

Chim Sáo in Vietnam and Gajah Baru in Indonesia continue to progress according to project schedules. We are working to deliver the next phase of approvals on a number of fields including Block A Aceh, Dua, Frøy, Bream, Solan and Fyne over the next six months.

Indonesia

Good progress continues to be made on the Gajah Baru project ahead of first gas expected by October 2011. Development drilling operations commenced on 23 September, and the Central Processing Platform construction is progressing to schedule. EPCI for the Onshore Receiving Facility is ongoing ahead of schedule. Overall, the project was 71% complete as at end October.

A tender process is under way for the FEED for the future Pelikan and Naga developments on Natuna Sea Block A. A contract for the geophysical and geotechnical survey work for the pipeline routing and the platform locations has already been awarded and the work will start this month.

On 28 October, the PSC extension for Block A Aceh (formerly known as North Sumatra Block A) was signed by the joint venture partners, the Government of Aceh, BPMIGAS and the Indonesia Minister of Energy and Mineral Resources. The development process can now move forward, and invitations to tender for the EPCI contract will be issued shortly. First gas is expected in 2013.

Vietnam

At the end of October, the FPSO conversion for the Chim Sáo project was over 80% complete and is on schedule to leave the yard in April 2011. The export pipeline for the gas has been fully installed. Development drilling is continuing, and is ahead of schedule. First production from Chim Sáo is still planned for July 2011.

The development concept for the Dua field, which will be tied back to Chim Sáo, continues to be refined. Premier has proposed to partners that FEED studies commence this month and a sanction decision will be made in H1 2011.

UK

The Huntington project has now received DECC approval and the upgrade of the FPSO Sevan Voyageur to include water injection and gas handling facilities is now proceeding under a signed charter party. The award of the development drilling rig contract is imminent. First oil is still anticipated in the first quarter of 2012.

As previously announced, Premier has entered into an agreement with Antrim Energy jointly to study options for the Fyne area. Under the terms of the agreement, Premier will have the option to acquire 39.9% interest in Block 21/28a containing the Fyne field in return for a pre-development and development cost carry which may include the drilling of an appraisal well on the Eastern part of the Fyne structure.

The development concept for the Solan field has been revised by the operator from the previous articulated column to an unmanned steel jacket-based solution. Preliminary work is under way to initiate the tendering process for the EPCI. A decision on participating in the project is now anticipated for Q1 2011.

Norway

Responses to the wellhead platform Invitation to Tender (ITT) for the Frøy project were received earlier in November. Technical studies are under way as part of pre-FEED work with third parties regarding potential tie-back opportunities in the area and on a water alternating gas (WAG) reservoir development scheme. The partners have agreed to take the project through a concept selection gate in February 2011 and are confident that project sanction will be achieved during summer 2011.

Responses to the ITT for a production unit for the Bream field have been evaluated and a preferred option is being pursued by the joint venture partnership. A final concept selection decision is expected in Q1 2011.

Portfolio Changes

Egypt

Following the provisional award of the South Darag block in the Gulf of Suez in a recent licensing round, Premier is in agreement with Hess Corporation Inc. (Hess) to farm in to 20% of the North Red Sea Block 1 concession in which Hess currently holds 100%. Premier believes that the Gulf of Suez plays may extend into this area. North Red Sea Block 1 contains significant resource potential in two independent plays in the Cretaceous and the Miocene. 3D seismic has been shot over a large portion of the block. Reservoirs, seals and source have been mapped onshore and can be extrapolated offshore. A well on the Cherry prospect in the Cretaceous is scheduled for drilling in December 2010 and a deepwater rig is currently mobilising to the location.

UK

Premier has pre-empted the purchase by Dana Petroleum of Suncor's interest in the Telford field. The operator Nexen has also pre-empted so that on completion in December, Premier's increase in the Telford field will be an additional 0.8% at a cost of £4.5 million. The Telford field is currently producing at around 15 kboepd (gross).

An agreement, conditional upon financing, has been reached with Canadian Overseas Petroleum Limited under which Premier will potentially farm down 40% in Blocks 15/24c and 15/25f, containing the Bluebell prospect, currently scheduled for drilling in the third quarter of 2011.

The Company was provisionally awarded nine new blocks in the UK Central North Sea under the 26th Licensing Round, including two operated blocks. Several of the awarded blocks are close to Premier's existing interests.

Congo

Premier is in the process of relinquishing its equity in the Marine-IX block offshore Congo.

Exploration

Exploration and appraisal programme

There are 23 wells currently drilling or planned for the remainder of 2010 and 2011:

1where technical work has been completed to define ranges and mean

Indonesia

Preparations for drilling Gajah Laut Utara-1 and Belut Laut-1 wells are well under way ahead of spud now scheduled for December. The 2011 programme is expected to include the drilling of Anoa Deep and Biawak Besar prospects in mid-2011, the Matang-1 well on Block A Aceh in North Sumatra and the Benteng well on the Buton block in South East Sulawesi.

Vietnam

An appraisal for our Ca Rong Do discovery on block 07/03 is planned for the first half of 2011. Prospect generation and well planning, including rig tendering, is under way for drilling an exploration well on Block 104-109/05, expected in the second half of next year.

Norway

Two wells will be drilled on PL378: a Grosbeak appraisal, and a test of the nearby Gnatcatcher prospect. This programme is scheduled to commence in December. The Gardrofa well is expected to drill in mid-2011 and discussions with rig owners to contract a semi-submersible are well advanced.

UK

The West Rochelle well drilled on Block 15/26b, close to the boundary with Block 15/26c, encountered hydrocarbons in an excellent quality reservoir, and was sidetracked. The sidetrack confirmed the presence of gas-bearing Kopervik sands. The plan is to recover this gas as part of a Greater Rochelle Development.

The follow-on programme in the Catcher Area has been delayed due to weather. It will commence as soon as sea conditions allow movement of and jacking down of the rig on location at the Varadero prospect.

Pakistan

The K-18ST well on the Kadanwari field spudded on 3rd November, targeting sands in the Lower Goru formation. Following success from recent Kadanwari exploration and development wells, two further wells are planned for the 2011 programme.

Financing

Given current favourable conditions in the bank market, Premier has chosen to refinance its floating rate bank debt and Letter of Credit facilities due to mature in March 2012. Following successful syndication, the new five-year facility has been increased by US$470 million at a significantly reduced interest cost. Total debt including undrawn and Letter of Credit facilities will, on completion, stand at around US$1.8 billion. Cash and undrawn facilities will be approximately US$1.1 billion.