19th Jul 2006 07:01
Premier Oil PLC19 July 2006 PREMIER OIL PLC ("Premier" or "the Company") Operational and Trading Update 19th July 2006 Premier Oil intends to announce its interim results for the six months to 30thJune 2006 on Thursday 21st September. In advance of these results, Premierprovides an update on recent operations and trading performance during the firsthalf of 2006. Highlights: • 100% exploration success record from three exploration wells in Indonesia • Discovery on our first well in Vietnam, the Dua prospect • Acquisition of 16.67% in the highly attractive North Sumatra Block A PSC in Indonesia • On target to deliver 4 high impact wells during 2006 at a planned spend of $50 million • New rig contracts in Gabon, Guinea Bissau, India, Indonesia and the UK, successfully locking in 2006/7 drilling programme • Strong cash flow generation leading to a net cash position at 30th June of around $40 million Simon Lockett, Chief Executive of Premier said: "Premier has continued to make excellent progress in realising its strategicgoals, with exploration success, progress in our development portfolio and apromising acquisition in Indonesia. We look forward to the second half of 2006,anticipating the results of high-impact exploration drilling from Vietnam, Indiaand the UK." 19 July 2006 ENQUIRIESPremier Oil plc Tel: 020 7730 1111Simon LockettTony Durrant Pelham PRArchie Berens Tel: 020 7743 6679Alisdair Haythornthwaite Tel: 020 7743 6676 Financial Highlights Working interest production for the first half of the year averaged 33,600 boepd(2005 FY - 33,300 boepd). Production from the Chinguetti field in Mauritaniahas now stabilised at around 35,000 boepd. At this level, Premier's totalproduction for the year is likely to average at or around the current level of33,000 boepd. Cash flows for the first half benefited from strong oil and gas prices with oilproduction sold at an average of $66.37 per barrel for the first half, a premiumto Brent. Indonesian gas prices were also extremely strong, benefitting fromhigh sulphur fuel oil pricing which drives the contracted price. Development capex for the full year is expected to be around $120 million afterinclusion of the $17 million purchase price for our acquisition in NorthSumatra. Exploration capex has been actively managed during the first half. This hasincluded farm-outs on favourable terms in Vietnam, India, UK and Pakistan. Weanticipate meeting our stated targets of drilling at least 4 high impact wellsfor the year on exploration spend of no more than $50 million (pre-tax). Premier's cashflow continues to be very strong. Net debt of $26 million at 31stDecember 2005 was transformed into a net cash position of approximately $40million at 30th June 2006. Exploration Update Current operations Vietnam Premier is currently drilling on the Dua prospect in Vietnam. Premier confirmedpresence of oil and gas in the Northern fault block of this prospect. Sidetrackoperations continue into the Southern fault block and a further release will bemade upon completion of operations. Egypt Premier's Al- Amir appraisal well was spudded on 25th May 2006. The wellappraised an earlier 2005 discovery that flowed 750 boepd. The well has reachedtarget depth and oil was successfully encountered within several horizons in theSouth Gharib reservoir. Indonesia In addition to its previously announced successful wells at Macan Tutul andLembu Peteng, Premier is pleased to report that the non-operated Lukah-1exploration well in the Kakap block encountered gas. Gas was tested over twointervals and flowed at a combined rate of 19.7 mmscf/d with some additionalflow of condensate. Premier holds an 18.75% of this discovery, close to theexisting infrastructure of the Kakap field. 2nd Half 2006 Exploration Programme ASIA Vietnam On completion of the Dua well, Premier will drill the Blackbird prospectexploring a large tilted fault block updip of a pre-existing well whichencountered very good oil shows. The Blackbird structure has the potential forup to 80 mmbbls of oil. Indonesia The Seadrill-5 rig is anticipated to spud an appraisal of Premier's significantLembu Peteng discovery in December 2006. The Lembu-Peteng discovery, announcedon 23rd March 2006, tested an oil zone at a stabilised rate of 610 boepd, andtwo gas zones yielded 8.5 mmscf/d of gas plus 580 boepd of condensate. India Premier plans to spud the high-impact Masimpur-3 well, a 2 Tcf onshore gasprospect in Cachar in December 2006. Premier recently completed a farmout onthis licence and retains a 14% interest in Masimpur. Premier has recently signed an LOI to secure the Century 28 rig to drill theMasimpur prospect and a possible further two wells on the Cachar block. Thefarm-in agreement also contemplates joint bidding for selected licences in theforthcoming NELP 6 exploration round. NORTH SEA UK Premier plans to drill the Peveril prospect on licence P802, commencing November2006. Premier has completed a farm-out of its interest and is in finalnegotiations with a drilling contractor to manage and drill the well. Premierretains a 30% interest in this 40 mmbbl prospect which is located close toexisting Fife Area infrastructure (Premier - 15%). Premier has also recentlymade two applications for new exploration acreage in the UKCS 24th LicencingRound. Norway Premier is continuing exploration activity on the 2005 APA blocks with a view tomaturing prospects for drilling in 2007 and 2008. Premier has formed a numberof AMI groups to progress applications in the forthcoming 2006 APA round. WEST AFRICA Mauritania Woodside has reported that the Atwood Hunter is now on location for the Colinwell. Colin is a 170 mmbbl Miocene prospect in which Premier holds a 4.63%share via its interest in PSC A. After a programme of wells which may includephase 2 development drilling on the Chinguetti field, the Atwood Hunter isscheduled to drill the Kibaro exploration prospect late in 2006 or early in2007. This is a 130 mbbl prospect in PSC A (Premier share 4.62%) with aCretaceous objective. 2007 Exploration Programme WEST AFRICA Guinea Bissau Given the tight rig market in West Africa, Premier is pleased to announce thatthe Global SantaFe rig Baltic has been contracted to drill the Eirozes andEspinafre prospects (predrill estimates 250 mmbbls and 70 mmbbls grossrespectively) in early Q1 2007. Having previously reserved slots with theBulford Dolphin Rig, operating delays and slippage in its programme led Premierto seek an alternative rig to secure the timing of our wells on these prospects. MIDDLE EAST AND PAKISTAN Pakistan The high-impact Anne well is now scheduled to spud in Q2 2007. The timing ofthis well has been moved to avoid the significant costs which would have beenassociated with drilling through the monsoon season. Anne is only the thirdwell to be drilled on the offshore Indus Delta and success on this high riskwell would open up a new oil frontier. Premier holds a 12.5% share in this 250mmbbl prospect. ASIA Indonesia Premier has extended the current 2006 rig contract with the Seadrill-5 for the2007 programme. It is anticipated that this will comprise a Premier-operated 5well programme with 2 exploration wells likely on Block A and further appraisalwells on the Lembu Trend and on Gajah Puteri. Premier has options on 2 furtherrig slots. India After completion of operations on Masimpur-3, which is planned to be drillingduring December 2006, Premier is planning to spud a further 2 wells on the largeChargola and Kancipir gas prospects. Premier will hold a 14% share. Philippines Premier operates Service Contract 43 in the Ragay Gulf with a 42.5% workinginterest. Having identified a trend of carbonate build-ups, Premier is planningfor a well to test the trend in the second half of 2007. Updated drilling charts for these programmes can be found on www.premier-oil.com Production and Development Portfolio Update Premier has continued to make strong progress in the commercialisation of itsproject development portfolio. ASIA Indonesia Natuna Sea Block A The West Lobe Wellhead Platform was installed in April and achieved mechanicalcompletion in June 2006. The Wellhead platform will be used to drill up to amaximum of 12 wells over the productive life of the field, will tie-in to theexisting pipeline facilities and will be controlled remotely from the existingAnoa production complex. A 4 well development drilling programme will commencein July using the Seadrill-5 drilling rig. Negotiations continue over the sale of further gas from Block A with prospectivebuyers in Singapore. We currently assess Singapore to be the optimal market fornew gas sales where new gas-fired power stations, as well as new petrochemicalplants, are planned, but maintain a watching brief over alternative markets,particularly domestic Indonesia. North Sumatra Block A Premier, together with its partners Medco and Japex, acquired a subsidiary ofExxonMobil which holds a 50% working interest in the North Sumatra Block A PSC,onshore Indonesia in March. The partners paid $51 million in aggregate, withPremier paying $16.7 million for a 16.67% interest in the block. The operatorof the block is ConocoPhillips (50%). The block contains three undeveloped discoveries, which in total are certifiedas holding over 650 bcf gross of proved and probable reserves (110 bcf net toPremier). The gas reserves will be developed to supply PT Pupuk Iskandar Muda(PIM), which operates two fertiliser plants located close to the Arun LNGfacility. Premier plans for first gas in 2010. Premier anticipates thatdevelopment costs for the three areas will be approximately $400 million gross. North Sumatra Block A offers substantial potential upside. Around 20 prospectshave been identified with total prognosed unrisked reserves of 1.5 tcf gross.The giant Kuala Langsa field is located at the Eastern edge of the block andcontains 10 tcf with high CO2 content. A map of the block can be found on Premier's website at www.premier-oil.com India The PSC for the Ratna field development project, offshore Mumbai, receivedpreliminary government approval earlier this year. Discussions continue withthe partners and MoPNG regarding offtake arrangements under the contract. Underthe draft PSC Premier is the operator with a carried 10% stake in the project.Post redevelopment, it is expected that production from the field will be inexcess of 20,000 boepd. MIDDLE EAST AND PAKISTAN Pakistan All four of our existing producing fields are performing extremely well, againgenerating record production levels in response to strong local demand for gas.Good progress is being made in pursuing field and plant capacity expansions onthe following projects: Zamzama Phase 2 expansion - expected onstream July 2007Qadirpur plant capacity enhancement - expected onstream January 2008Bhit Phase 2 - expected onstream January 2008 These initiatives are projected to increase our net production in Pakistan fromthe current level of around 12,000 boepd to over 16,000 boepd during 2008. A Qadirpur development well is currently being deepened to evaluate a lowerprospect ("Qadirpur deep") targeting gross mean reserves of 400 bcf. Resultsfrom this well are expected in September. A 3D seismic study on Kadanwari has been completed and has identified newprospects for drilling. WEST AFRICA Mauritania Production from the Chinguetti field (Premier - 8.12%) has currently stabilisedin the 35-40 kboepd range (gross). A significant increase in production is notexpected until additional development wells are onstream. It is too early tofully assess the impact of recent reservoir performance in reserve estimates.Options for the next phase of development drilling are currently beingfinalised. Evaluation of the potential development of the Tiof and Tevet discoveries in PSCB (Premier - 8.12%) is advanced and expected to lead to initial developmentdecisions in early 2007. Both fields present considerable technical andcommercial challenges which are being actively addressed by the joint venture. NORTH SEA UK Production on Wytch Farm in the first half of 2006 was lower than expected,however, Premier is looking forward to a strong second half as two new wells arebrought onstream and further interventions are completed to maintain productionlevels. The Operator is considering options for the development of the 98/2offshore discovery now named Beacon. Kyle oil production has been better than expected during the first half of 2006. In August the K15 well will be re-perforated which will maintain oilproduction rates. Approvals have been given for the purchase of long lead itemsrequired for the Palaeocene well that is currently scheduled for the end of thesecond quarter 2007. Norway Premier is working towards declaration of commerciality on the Froy field(Premier 50%) by the end of 2006, prior to submitting the plan of developmentduring the first half of 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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