Tolmount development sanctioned

This announcement has been determined to contain inside information

PREMIER OIL PLC

("Premier")

Tolmount development sanctioned

20 August 2018

Premier is pleased to announce that the development of its Tolmount Main gas field has been sanctioned by the joint venture and infrastructure partners. 

The Premier-operated Tolmount Main gas field, located in the Southern North Sea, is expected to produce around 500 Bcf of gas (96 mmboe) with peak production of up to 300 mmscfd (58 kboepd).

The project entails a minimal facilities platform exporting gas to shore via a new gas pipeline. The EPCIC (Engineering, Procurement, Construction, Installation & Commissioning) contract for the platform has been awarded to Rosetti Marino. Centrica's Easington terminal has been selected as the host facility and Saipem as the pipeline EPCI contractor. Selection of the rig contractor for the four development wells is expected imminently.

Premier's share of the capex required to develop this large gas field is estimated at US$120 million comprising project management and development drilling costs. The infrastructure joint venture between Humber Gathering System Limited (a member of the CATS Management Limited group of companies) and Dana Petroleum will own and pay for the platform and pipeline capex as well as pay for upgrades to the onshore terminal. In return, Premier will pay a tariff for the transportation and processing of Tolmount gas through the infrastructure.

The Tolmount Main project now moves into the execution phase with construction works scheduled to start later this year. First Gas is targeted for Q4 2020.

The partners in the Tolmount gas field are Premier (50 per cent, operator) and Dana Petroleum (50 per cent).

Tony Durrant, CEO, commented

"The sanction of our high return Tolmount project marks a major milestone for Premier and underpins our medium term UK production profile. Tolmount is one of the largest undeveloped gas discoveries in the Southern North Sea and is, in barrel of oil equivalent terms, similar in size to our Catcher project. We have also secured an innovative financing structure for the project which minimises our capital expenditure whilst maintaining our exposure to the upside in the Greater Tolmount Area."