MercoPress. South Atlantic News Agency

Falklands oil industry: Premier ratifies its commitment to develop Sea Lion

Premier's Falkland Islands director Neil Hawkings expects engineering estimates for the fourth quarter of the year

Britain's Premier Oil said it was seeking a partner for an oil development in the Falkland Islands in order to reduce its exposure to the 5.2 billion dollar project and make higher payouts to shareholders.

 The company said at a capital markets day on Thursday that it was looking for another company to invest in the Sea Lion project off the coast of the Falkland Islands in the South Atlantic before it would give the green light to the development.

Premier is attempting to win back investor support after successive downgrades to output last year. On Tuesday its long-standing chief executive, Simon Lockett, said he would be stepping down, which led to hopes for a revival in the company's fortunes.

Premier said a deal for Sea Lion, which could start producing oil by late 2018, was already in motion. Sea Lion was where oil was first discovered offshore the Falklands in 2010. It was later confirmed the commercial value of the prospect.

“We have started talking to people, but we won't go and formalize a process until we've got engineering estimates around the fourth quarter of this year,” Premier's Falkland Islands director, Neil Hawkings, said.

Premier told investors it would look to dispose of other assets as well, enabling it to enhance the returns it pays them.

Across the oil sector, but primarily in large companies such as Shell and BP, shareholders are calling on firms to control spending and return spare cash, amid concerns over rising costs and the returns available if oil prices drop.

Eighteen months ago, Lockett led Premier into the Falklands, signing a one billion dollars deal with Rockhopper Exploration that was intended to transform the Falklands into an oil producer.

Premier's move, which gave it a 60% stake in the Sea Lion oil field, drew criticism from some parts of the market, however.

Shares in explorer company Rockhopper closed up 9.5%, which analysts attributed to Premier's restating of its commitment to Sea Lion following doubts brought about by Lockett's planned departure. Premier's stock, which has lost about a quarter of its value over the past year, closed little changed.