14th Jan 2008 07:01
Premier Oil PLC14 January 2008 PREMIER OIL PLC ("Premier") Trading and Operations Update Premier today provides a trading and operations update ahead of its 2007 FinalResults, which will be announced on Thursday 13 March 2008. HIGHLIGHTS Current Trading Operations • Average production rates for 2007 8% higher than 2006 at 35.7 kboepd; year end run rate of 38.8 kboepd (December average); • Strong oil and gas prices realised in second half; full year average of $74.6 per barrel, a 3% premium to Brent; • Increased balance sheet strength with cash balances of around $330 million at year end. Development Assets • Major development projects progressing as planned to build Premier's production to 50,000 boepd by end 2010. • Chim Sao (Vietnam), Alur Siwah and Gajah Baru (Indonesia) expected to reach project sanction this year and on-stream in 2010. Drilling Update • Programme of approximately 18 development wells and up to 12 exploration and appraisal wells planned for 2008; • Forward programme: - Up to 24-month Vietnam campaign expected to commence in mid-March 2008; - Monte Cristo-1 well in Philippines expected to spud 1Q 2008; - Bream appraisal well in Norway expected to spud during March or April 2008; - Significant development well programme in Pakistan includes accessing a number of deeper exploration prospects; - Qadirpur deep testing programme scheduled for April 2008. - Infill drilling at Wytch Farm, Scott and Chinguetti New Joint Venture • Execution of joint venture agreements with EIIC planned later this week. Board changes • Appointment of Mr David Lindsell and Mr Michel Romieu as non-executive directors. Simon Lockett, Chief Executive, commented: "2007 saw significant progress on Premier's development projects as importantgas contracts in Indonesia and Singapore were signed. We begin 2008 in strongfinancial shape, with an active exploration programme, especially in Vietnam,and on target to deliver our stated production target of 50,000 boepd by the endof 2010." ENQUIRIESPremier Oil plc Tel: 020 7730 1111Simon LockettTony Durrant Pelham PRJames Henderson Tel: 020 7743 6673Gavin Davis Tel: 020 7743 6677 14 January 2008 CURRENT TRADING OPERATIONS Strong gas demand and reliable production performance from our gas fields inIndonesia and Pakistan, increased equity in the UK Scott field and increasedproduction from the successful Kyle gas lift programme contributed to a year-endproduction rate of 38.8 kboepd (four week average) compared to 34.4 kboepd forthe equivalent period last year. Estimated average production for the Companyfor the full year 2007 was 35.7 kboepd (2006: 33.0 kboepd), an increase of 8%. Revenues in the second half of 2007 continued to benefit from a strong oil andgas pricing environment. The average realised crude oil price for 2007 was$74.6 per barrel (2006:$64.9/bbl) compared to a dated Brent average of $72.4 perbarrel (2006:$64.9/bbl). Average gas prices for our principal gas producingareas for 2007 were: US$/MCF 2007 2006Indonesia $11.3 $9.4Pakistan $3.0 $3.1 As a result of the continuing positive operating cash flows, the Group hasmaintained its strong balance sheet, with year-end cash resources estimated at$330 million. The net cash position at year end is expected to be around $77million, assuming a debt valuation of the convertible bond issued during 2007 of$200 million. The Group's income statement for the year will be impacted by a significantnon-cash item. As a result of the higher commodity prices at year-end, relativeto the position at 30 June 2007, the Company will record an additionalmark-to-market adjustment in respect of existing commodity hedges in the secondhalf of the year. This is estimated at $40 million on an after tax basis. Thecurrent year provision will reverse out as a profit in the income statement overthe life of the hedges. We have recently restructured our arrangements for selling certain future oilproduction incorporating the previous floors and caps into new physical offtakearrangements. This is expected to reduce significantly and potentiallyeliminate the impact of mark to market valuations on future income statementsfrom our current oil hedging arrangements. DEVELOPMENT ASSETS Programme Update Significant progress on all our development projects gives us increasingconfidence that Premier will achieve its stated production target of 50,000boepd by the end of 2010. Indonesia Natuna Sea Block A In Q4 2007 Premier announced the signature of Heads of Agreements with SembcorpGas Pte Ltd for gas sales into the Jurong petrochemical complex in Singapore,and with PT Perusahaan Listrik Negara (PLN) and PT Universal Batam Energy (UBE)for use in power generation in Batam. Definitive agreement discussions are nowunder way. Development of the Gajah Baru field in the Natuna Sea will now commence withproject sanction expected later this year and first gas planned for 2010. North Sumatra Block A The operator of North Sumatra Block A, PT Medco E&P Malaka (MEDCO) and PT PupukIskandar Muda (PIM) signed a Gas Sales and Purchase Agreement (GSPA) in Jakarta,on Monday, December 10th, 2007. The GSPA will govern the sale of gas from theAlur Rambong, Julu Rayeu, and Alur Siwah fields in North Sumatra Block A to thePIM fertilizer plants on the northern Aceh coast. A field development plan hasbeen submitted to BPMigas for approval. FEED studies are planned to commence shortly, with an EPC contract awardexpected in late 2008. Development wells on Alur Rambong and Alur Siwah will bedrilled in 2009, with first gas expected in 2010. Vietnam The draft Reserves Assessment Report (RAR) for Dua and Chim Sao (formerlyBlackbird) was submitted to the Vietnamese authorities in December 2007. Workon the Outline Development Plan continues. Outline Development Plan approval,approval of the Field Development Plan, and Project Sanction are all targetedfor 2008. First production from Chim Sao is on target for 2010. Pakistan The Badhra development/Bhit Phase 2 project is complete and first gas fromBadhra was achieved on 7 January 2008 adding 20 mmscfd (gross) from the firstwell. At the Bhit field, two new wells will be drilled to maintain theproduction profile. A further Badhra well which will access deeper targets hasalso been spudded. At the Qadirpur field, the plant capacity enhancement project is progressingwith first gas planned for later in the year. Four development wells will bedrilled to maintain the production plateau. In 2007, the Qadirpur Deep-1 wellwas drilled to a depth of 4,681 metres before being suspended when higher thananticipated temperatures and pressures were encountered. Specialist equipmenthas now been ordered and testing on the well is expected to resume in April2008. In the event of a successful test on Qadirpur Deep-1, Qadirpur Deep-2 mayfollow later this year. Zamzama Phase 2 came on-stream in 2007, but plant problems meant that onlymedium calorific value (MCV) could be supplied. It is expected that highcalorific value gas (HCV) deliveries will be achieved later in 2008. The ZamzamaNorth well will be tied in to increase and maintain the production plateau, andtwo new infill wells will also be drilled which will access deeper targets. On Kadanwari, one new development well will be drilled in 2008. UK Two infill wells will be drilled into the Sherwood reservoir on Wytch Farm. Athree well infill programme on the Scott field is expected to commence in thefourth quarter of 2008. Norway Development studies continued on the Froy field, culminating in a tender processfor the production facility in the fourth quarter. This indicated lead timesthat imply expected Froy first production in 2011. Mauritania Three workovers on existing wells, and two new development wells on Chinguettiare planned to be drilled in Q1 2008. Pre-development studies on Banda and Tiofwill continue in 2008. DRILLING UPDATE In addition to approximately 18 development wells, a programme of up to 12exploration and appraisal wells is planned for 2008. An updated drilling chartis available at www.premier-oil.com. Exploration and Appraisal Drilling Vietnam The jack-up rig is expected to commence a firm six month programme in March2008, with three six month options. The first well to be drilled will be onChim Sao North. Chim Sao was discovered and tested by Premier in 2006. A wellis required to optimise the development plan and is planned to be suspended as afuture production well. The rig will then move on to drill exploration wells in Block 12W including theChim Ung (formerly Falcon) well which will test a prospect on trend with ChimSao, and other high impact and near-field exploration prospects. The programmewill target reserves in excess of 200 mmbbls with the ability to tie-backdiscoveries into the core Chim Sao development. The rig could then be deployedfor appraisal of new discoveries, or commence early development wells on theChim Sao field. Philippines The Monte Cristo-1 well is now expected to spud in 1Q 2008. The well istargeting a 20 mmbbls prospect. Premier holds a 21.25% carried interest. Gabon The THAM-1 well on the Themis licence in Gabon was spudded on 30th December 2007and drilled to TD at 1330m. The well has been plugged and abandoned withhydrocarbon shows. Congo Premier is running a farmout process for potential farminees which is expectedto be completed in early February 2008. Premier hopes to spud a well on the250-300 mmbbls Frida prospect in Q4 2008. Premier currently holds a 58.5%equity interest. Mauritania The Atwood Hunter is expected to drill an appraisal well on the Banda GasDiscovery in March 2008. Egypt An exploration well is expected to spud in February 2008 on the NW Gemsa licencein Egypt. This will be followed by a second contingent well in the event ofsuccess. Premier now holds a 10% interest in this licence, operated by Vegas. Norway An appraisal well is expected to spud on the Bream discovery in March 2008.Bream was originally discovered in 1971 and lies close to the existing Ymedevelopment. Bream is estimated to hold between 40 and 100 mmboe of recoverablereserves. Premier holds a 20% share in this licence and a 40% share, asoperator, in the adjoining exploration block. Seismic Programmes A significant seismic programme is planned for 2008 in order to identify anddefine prospects for drilling in 2009 and beyond. In Indonesia, 2D seismic willbe acquired over the Tuna and Buton Blocks. In Vietnam, 2D seismic will be shotover Block 07/03. In Norway, 2D seismic will be acquired on licence PL417 and3D seismic will be acquired over Premier operated licence PL406. NEW REGIONAL JOINT VENTURE It is anticipated that shareholder agreements will be executed with EmiratesInternational Investment Corporation (EIIC) later this week, with a view toestablishing joint venture companies in the Middle East and North Africa. BOARD CHANGES As announced separately today, Mr. David Lindsell and Mr. Michel Romieu havebeen appointed as non-executive directors with effect from 17th January 2008. Mr. Scott Dobbie and Mr. Ron Emerson will retire as non-executive directors witheffect from June 6th 2008, the date of Premier's Annual General Meeting. Mr. Dobbie joined the Board in December 2000 and Mr. Emerson joined the Board inMarch 2001. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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