Premier Oil PLC - Trading and Operations Update
("Premier" or "the Group" or "the Company")
Trading and Operations update
Premier today provides the following Trading and Operations update for the period 1 January to
· Forecast broadly free cash flow neutral for full year 2020 at current forward curve
o 30% of 2020 volumes hedged at
· Liquidity retained with c.
· Court approved creditor schemes of arrangement; re-engaging with stakeholders around proposed transactions and 2021 credit maturities
· Net debt reduced to
· Production averaged 70.1 kboepd to end of April, impacted by a recent unplanned Catcher outage (now restored) and cessation of Huntington production; 2020 guidance revised to 65-70 kboepd
· Tolmount schedule impacted by COVID-19 with first gas now expected in Q2 2021; Tolmount East (Premier-operated) on track for sanction decision by year-end 2020
· Zama unitisation and sales process ongoing; Mexican regulator expected to instruct unitisation in the coming weeks
· Operated growth projects on hold, optionality preserved:
o Sea Lion project suspended with farm-in documentation agreed
o Tuna appraisal to be fully funded, subject to final approvals
o Highly prospective exploration acreage retained with deferred drilling commitments
"We are proactively managing the business in these challenging times and remain focused on the welfare, health and safety of our people. We continued to generate free cash flow during the period and, based on the current forward curve, expect to be broadly free cash flow neutral for the full year, benefitting from our hedging programme and action taken to reduce our expenditure."
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Tel: 020 7824 1116
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Tel: 020 3757 4983
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Premier remains extremely vigilant and focussed on the welfare, health and safety of all of its staff and contractors. To date, production operations have not been materially impacted by COVID-19. Pre-flight screening measures and additional passenger protocols have been implemented, including dedicated flights for workers who develop COVID-19 symptoms offshore and for those with whom the suspected cases have been in close contact. Premier has also reduced manning levels on all of its installations to ensure continued safe operations and has significantly reduced the scope of its planned shut downs to include critical maintenance and committed project work only.
Group production averaged 70.1 kboepd to the end of April, impacted by a recent unplanned shut down at Catcher and the cessation of Huntington production in early April. Together with the delay to Tolmount first gas, this has resulted in the Group revising its full year production guidance to 65-70 kboepd (from 70-75 kboepd).
Tolmount is Premier's only sanctioned development project and will add 20-25 kboepd (net, Premier 50 per cent interest) to Group production once on plateau. In March, the Rosetti yard where the platform is being built entered lockdown. Work resumed earlier this month with appropriate COVID-19 restrictions in place and a revised installation period is now being planned for late summer. The drilling rig will be mobilised thereafter to assist with final commissioning of the Tolmount platform and to drill the four development wells. Meanwhile terminal works are progressing and the pipeline lay is on track for this summer. First gas is now forecast for the second quarter of 2021.
Premier continues to progress Tolmount East so that a final investment decision can be made by year-end with the development concept agreed earlier this year. Once on-stream Tolmount East (and potentially Mongour which could also be developed as a subsea tieback to the Tolmount infrastructure) will help extend plateau production from the Tolmount area.
Exploration and appraisal
In April, Premier drilled the Charlie-1 well in Area A on the Alaska North Slope. As previously announced, the well encountered non-commercial gas condensate rather than the targeted light oil. As a result, Premier plans to exit the licence as soon as regulatory approvals have been received.
Premier has taken action to defer activity across its exploration portfolio to reduce expenditure, given the current market conditions. This includes the deferral of drilling on Block 717 in the
Execution of a fully termed farm down agreement with Zarubezhneft for a 50 per cent interest in the Premier-operated Tuna discoveries offshore
Premier has hedged c.30 per cent of its full year 2020 oil and gas entitlement volumes at an average equivalent price of
Premier has continued to take action to reduce its 2020 expenditure to lower its free cash flow breakeven oil price. As a result, the Group now expects to be broadly free cash flow neutral (after interest) for the full year based on the current forward curve.
Full year operating costs (including lease costs) are currently forecast to be c.
Forecast 2020 total capex including abex now stands at
The Group currently retains adequate liquidity. As at the end of April, Premier had unrestricted cash of
Status of proposed acquisitions and related funding arrangements
In April, the
While Premier remains confident in the strength of its legal case and expects the Court to dismiss the appeal, the Board believes it prudent to re-engage with its stakeholders regarding the proposed transactions and extension to its
Group production breakdown
1 January -
1 January -
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1 sold at
The information contained within this announcement is deemed by Premier to constitute inside information as stipulated under the Market Abuse Regulation. By the publication of this announcement via a
This information is provided by RNS, the news service of the
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