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Premier Oil says fields are outperforming and debt deal is in final negotiations

It is in the final stages of talks for a refinancing, the oil producing business is performing well and 'first oil' from Catcher development is now just around the corner.

Premier Oil offshore platform
Premier Oil is presently flowing at 80,000 boepd

Premier Oil PLC (LON:PMO) shares advanced in early deals as a debt refinancing gets nearer and as certain fields outperform.

The oil company said a comprehensive term sheet for refinancing is in the final stages of negotiation; once agreed it will significantly derisk the investment proposition.

“Refinancing of the group's debt has taken longer than anticipated but will, once completed, put Premier in good stead to reinvest in the business while, at the same, time paying down debt,” said chief executive Tony Durrant.

It presently has some US$2.8bn of debt, while there’s US$600mln available in cash and undrawn credit facilities.

Premier also revealed that group production was currently above 80,000 barrels of oil equivalent per day (boepd).

This comes as the Huntington, Chim Sáo and Natuna Sea Block A operations outperform expectations, while output from the recently-added Solan field is constrained.

Over the course of the year the production rate has averaged 69,000 boepd, and Premier says it is on track to meet its previously upgraded guidance of 68,000 to 73,000 boepd for the full year.

The next phase of Premier’s production growth will come from the Catcher field, which is due to come online in 2017. The company today told investors that the capital cost of the Catcher development now amounted to US$1.7bn, which is some 24% less that estimates at the time of project sanctioning.

Work to deliver Catcher’s floating production storage and offloading (FPSO) vessel continues apace, it added, and remains ahead of schedule.

Durrant declared: “Against a challenging commodity price backdrop, Premier continues to deliver operationally.

“The company is benefiting from a step change in production with a significantly lower cost base while excellent progress has been made on the Catcher project, which remains on track for first oil next year.”

Premier revealed it would continue to run a tight ship into 2017, with the anticipated capex budget more than halved at US$300mln. It added that the exploration and development capex for 2016 would be below prior guidance of US$730mln.

Operating costs and admin costs were also said to be significantly below budget, now respectively forecast at US$15.9 per barrel and US$196mln.

Separately, the company noted that exclusivity with a potential buyer of its Pakistan assets has ended and it has now also engaged with other interested third parties.

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