Interim Management Statement

PREMIER OIL plc

("Premier" or "the Company")

Interim Management Statement

17 May 2012

Premier today provides its Interim Management Statement for the period 1 January to 17 May 2012. This statement is issued ahead of Premier's Annual General Meeting, which is being held at The Institute of Directors, 116 Pall Mall, London SW1Y 5ED at 11am tomorrow, Friday 18 May.

HIGHLIGHTS

·; Production averaged 56.1 kboepd during the first four months of the year. Recent performance has been strong, averaging 62.7 kboepd over the last four weeks.

·; Premier reiterates its production guidance of 60-65 kboepd for 2012 with an exit rate of 75 kboepd. Medium-term production target of 100 kboepd remains unchanged and on track.

·; Huntington and Rochelle are both expected on-stream in the fourth quarter of 2012, as previously guided.

·; Good progress has been made commercialising new projects with the approval of the Solan Field Development Plan in the UK, sanction of Pelikan and Naga by partners in Indonesia and the approval of the Dua project in Vietnam by Premier and Santos.

·; A programme of around 12 exploration and appraisal wells is planned for the remainder of 2012, targeting an unrisked potential of approximately 160 mmboe, net to Premier. This includes the Carnaby well on the Catcher acreage in the UK, which spudded on 11 May, and the Benteng well on the Buton Block in Indonesia, which is currently drilling.

·; Notable discoveries year-to-date include Anoa Deep, which has opened up a deeper potential on Natuna Sea Block A in Indonesia, and the K-30 exploration well on the Kadanwari Block in Pakistan which encountered gas in a previously untested fault block.

·; Premier has signed an exclusive arrangement with EnCounter Oil, a new exploration company set up by the former senior exploration team of EnCore, to seek additional exploration opportunities in the Central and Northern North Sea.

·; Premier is also in the process of submitting a number of licence applications in both existing and new geographies, including the UK and Cyprus.

·; Premier is in a strong financial position, with cash and undrawn facilities of $1.5 billion.

Simon Lockett, Chief Executive, commented:

"We are pleased with the field production performance in the early months of 2012 and with the tangible progress that has been made on our next generation of development projects. Our focus over the next few months will be on ensuring the continued high quality execution of our projects and on building the materiality of our future exploration portfolio."

Enquiries

Premier Oil plc Tel: 020 7730 1111

Simon Lockett

Tony Durrant

Pelham Bell Pottinger Tel: 020 7861 3232

Gavin Davis

Production operations

Production averaged 56.1 kboepd in the first four months of the year. Recent performance has been strong, averaging 62.7 kboepd over the last four weeks. Average production for the year is targeted to be 60-65 kboepd with an exit rate of 75 kboepd, in line with previous guidance. Premier's medium-term production target of 100 kboepd from existing projects remains unchanged and on track.

UK

UK production is in line with forecast in spite of the temporary loss of production (approximately 2 kboepd) from the Kyle field following the Banff FPSO incident in late 2011. This is largely due to improved uptime at the Balmoral area fields and successful well intervention activity at Scott. In addition, an active infill drilling programme was initiated at Wytch Farm and the first well drilled under the new operator is expected to be tied into production during the second quarter.

South East Asia

Chim Sáo production during the first four months of the year was lower than originally planned. This was due to post-commissioning facilities issues, which have now been largely resolved. Testament to this is that the facility has recorded an uptime of 98 per cent over the last four weeks. Meanwhile, the reservoir continues to perform well. The field has been tested at over 52 kboepd and an average of approximately 36 kboepd was produced over the last four weeks from nine producing wells. The first producer of a two-well supplementary drilling programme, which will develop additional reservoirs, is now being drilled.

Gas demand from Singapore remained strong during the first four months of the year. Under GSA 1, Block A captured a market share of 50.8 per cent against its contractual market share of 36.9 per cent, with the Anoa field continuing to perform well. The deliverability of the reservoir and the platform performance at Gajah Baru continue to meet expectations: the facilities achieved an uptime of more than 99 per cent and all demand from Singapore customers, which averaged 65 BBtud over the first four months, was met. The Gas Swap Agreement has not yet been executed due to the recent withdrawal of the planned gas purchaser. An alternative buyer has been proposed by the Indonesian industry regulator, BPMIGAS, and discussions are expected to be initiated shortly.

Pakistan

Production from Pakistan in the first four months of 2012 was around 16 kboepd compared to the forecast of approximately 15 kboepd. This improvement was largely due to the tie-in of the K-27 well (a 2011 discovery) on Kadanwari, the completion of two extended reach wells at Qadirpur and additional perforation work on three wells at Zamzama.

In Pakistan a three well pilot programme, which will test the tight gas potential in the Kadanwari area, has been initiated. The results of the first well, which spudded on the 5 May, are expected in the second quarter.

Development projects

UK

Good progress has been made offshore on the non-operated Huntington project in the UK North Sea. The production wells drilled to date have exceeded expectations and development drilling is expected to be completed in July. The infill pipeline is now being laid and a two month installation FPSO window, commencing on 1 September, has been secured. Previously announced delays to the upgrade of the FPSO have been addressed by increasing the manpower in the yard. The operator of the field continues to forecast fourth quarter for first oil with an expected plateau production rate of 25kbopd (gross).

At Rochelle, the first of the two development wells is expected to commence drilling in June, while the upgrade to the Scott platform is progressing to schedule. First gas remains on track for the fourth quarter.

The Premier-operated $850 million Solan project, West of Shetland, is now under way. DECC approved the Field Development Plan in April and a rig contract for the WilPhoenix has been executed with Phase 1 development drilling expected to commence in April 2013. The contracts for the topsides facilities, steel jacket, heavy lift installation and tank construction are expected to be completed by the end of May. First oil from the 40 million barrel oil field is expected in the fourth quarter of 2014.

On the Premier-operated Catcher project, concept engineering and evaluation by the JV partners continues to progress. It is expected that an agreement on the conceptual design of the development will be reached in the third quarter. Premier continues to target a final investment decision around year-end and first oil in 2015.

Norway

In Norway, the conceptual design of the Bream project was formally agreed among the JV partners in March and the operator has signed a FEED agreement. An invitation to tender to drill the development wells has also been issued and the JV partners anticipate achieving formal project sanction in the second half of 2012.

Elsewhere in Norway, a terms of reference for an area evaluation is being established by the companies participating in the Frøy area. It is expected that the area study will be completed by year end. Premier continues to model first oil for 2017.

Vietnam

In Vietnam, the Premier-operated Dua project, a tie-in to the Chim Sáo field, was formally sanctioned by Premier and Santos in April. It is expected that the necessary Vietnamese Government approvals will be received during the second quarter. In the meantime, bids for FPSO modifications and the drilling rig have been received and are being evaluated. Premier continues to target 2014 for first oil.

Indonesia

In Indonesia Anoa Phase 4, which will develop around 200 bcf of undeveloped proven reserves on the Premier-operated Natuna Sea Block A, is expected to be completed in 2013 and preparations are well-advanced for the first phase of offshore construction in July. The Pelikan and Naga projects, also on Natuna Sea Block A, are in the execution phase following the selection of the EPCI contractor and the formal approval of the project by the JV partners. Final government approvals are being sought and are expected to be received shortly. First gas from Pelikan and Naga, which are estimated to have total combined P50 reserves of 150 bcf, is targeted for 2014.

Exploration

Exploration and appraisal programme

A programme of around 12 exploration and appraisal wells, including the Carnaby and Benteng wells which are currently drilling, are planned for the remainder of the year, targeting approximately 160 mmboe of net unrisked resources.

* mean gross resource estimate

North Sea

Five of the wells planned for the remainder of 2012 are located in the UK North Sea. This includes the Carnaby exploration well, on the Catcher licence, which is targeting a Tay reservoir and was spudded by the Sedco 711 on 11 May. The Sedco 711 will follow on with the Premier-operated Coaster prospect on the block adjacent to Carnaby.

Elsewhere in the UK North Sea, the WilPhoenix has been contracted to drill Spaniards East, which is a moderate risk Cretaceous reservoir prospect close to the producing Scott field, in the third quarter. The WilPhoenix will then move to drill the Cyclone prospect, a stratigraphic play, immediately after the Spaniards East well.

In the Norwegian North Sea, the Luno II prospect, located on the southwest margin of the productive Utsira high, is expected to spud in the fourth quarter.

Asia

In Vietnam, the Chim Sáo North West appraisal well will test a potential of 30 million barrels of prospective resource in the fault blocks immediately adjacent to the Chim Sáo producing field. This appraisal well is expected to spud in the second quarter.

In Indonesia, the Anoa Deep well, which was drilled in February and production tested in March, has opened up a new play for Premier via the discovery of gas in the fractured Lama reservoir on Natuna Sea Block A. The follow-on potential to that discovery is being assessed by Premier and multiple drilling candidates are being matured for 2013 drilling and beyond.

The high risk Benteng prospect on the Buton Block is currently being drilled and the results are expected in early June. Elsewhere in Indonesia, on Block A Aceh, the first exploration well since the award of the new PSC will be drilled at Matang. This low risk well has the potential to unlock a play which, in the success case, would add more than 250 bcf of gas to the existing resource base on Block A Aceh.

Kenya

The interpretation of the 3D and 2D data which was acquired offshore Kenya earlier this year is expected to be completed during the fourth quarter of 2012.

New Ventures

Premier has signed an exclusive arrangement with EnCounter Oil, a new exploration company set up by the former senior exploration team of EnCore Oil. EnCounter will seek to identify additional exploration opportunities in the Central and Northern North Sea for Premier to pursue. Premier hopes to harness the proven exploration skills of the EnCounter staff in order to improve the quality and materiality of its exploration programme in the UK North Sea.

Premier remains a committed explorer in the UKCS and continues to actively build its portfolio. Premier was encouraged by the opportunity set available in the UK 27th Round and has submitted applications for 15 licences (10 as operator). In Norway, Premier is focusing on the APA Round and the Open Licence Round which will be held in September and November respectively.

As part of Premier's growth ambitions in frontal fold belt plays, two applications were submitted in the 2nd Cyprus Licence Round. The results are expected in the next three months.

Finance

Capital expenditure for 2012 is expected to be in line with previous guidance of around $1 billion.

Premier's total debt facilities (including letters of credit) at 30 April were US$2.7 billion while net debt was US$860 million with cash and undrawn facilities of approximately $1.5 billion.

In May, Premier sold forward first half 2013 production of 0.75 mmbbls of Dated Brent at an average price of $114/bbl and 24,000 MT of HSFO Sing 180 at a price of $683.75/MT. In total, including previous positions, approximately 10% of expected liquids and 18% of expected Indonesian gas production for the first half of 2013 has been sold forward.

Future Announcements

Premier's 2012 Half Year Results will be announced on Thursday 23 August 2012. A Trading and Operations Update is planned for Thursday 12 July 2012.