Britain’s Premier Oil increased its 2019 production guidance on Thursday, saying output had been boosted by efficiency measures and a late sale from its now-divested Pakistan oil fields. The company said it now expects output to reach 75,000 to 80,000 barrels of oil equivalent per day (boed) this year, from up to 75,000 boed previously.
The company also announced that its interests in the Falkland Islands Sea Lion projects are well advanced.
Premier’s output has been buoyed in the past year by its flagship Catcher field in the British North Sea, where it expects to approve an expansion project later this quarter.
The firm, which has a market capitalization of around 750 million pounds, sat on net debt of US$ 2.25 billion at the end of April. It sees that shrinking by the upper end of a US$ 250 million to US$ 350 million range by the end of the year at current oil prices.
“With Brent (crude oil futures) trading above US$ 70 a barrel, we anticipate sustained interest in Premier,” RBC analyst Al Stanton said.
The market remains focused on Premier’s Zama discovery in Mexico, where it expects gross output to eventually reach as much as 175,000 boed. Results for a third appraisal well there are due in June.
In March Premier flagged a plan to submit a formal application for US$800-US$900 million in senior debt for its Sea Lion projects off the Falkland Islands in early May.
In the North Falkland Basin, technical definition and cost optimization of the Sea Lion project is nearing completion. Preparation of the Preliminary Information Memorandum and the related independent expert reports designed to secure senior debt funding for the project is also well advanced
On Thursday it said the preparation of documents needed to secure funding for the project was “well advanced”.
Premier has hedged around 4 million barrels of oil at about US$ 69 a barrel for the second half of 2019 to guard against sudden oil price drops, and around 1.6 million barrels at US$ 66 a barrel for next year.
CEO Tony Durrant commented: “We continue to deliver ahead of plan. Production and free cash flow are ahead of forecast for 2019 and, consequently, we are reducing our debt faster than anticipated. At the same time, we are making good progress on our growth projects. We look forward to concluding the Zama appraisal campaign and to spudding Tolmount East, which has the potential to deliver a step change in value to the already high return Tolmount Main project.”