Two pieces of news will be on Premier Oil PLC (LON:PMO) investors’ minds ahead of Thursday’s interim results statement.
Most directly, is the news that Premier is selling its entire 33% stake in the Wytch Farm operation, onshore UK, in a deal that will give a US$275mln balance sheet boost – with a transaction value of US$200mln and the release of some US$75mln linked to future abandonment liabilities.
Wytch Farm accounted for some 5,000 barrels oil equivalent per day - Premier's guidance for 2017 is for 75,000 barrels - and it just recently picked up an additional stake in the British oil field, so investors will probably be intrigued to find out more about the strategic rationale behind the proposed transaction.
One city analyst noted that it would represent a disposal of a non-core, non-operated asset that is entering into long term decline, and would also help accelerate Premier’s debt reduction.
Less directly, investors may well also look to EnQuest’s production downgrade as a reminder of the frustrations of new field start-ups.
EnQuest on Tuesday flagged that a prolonged commissioning at the Kraken field has caused lower than expected operational efficiency from the Kraken field, and that meant lower than forecast production volumes. Kraken is yielding around 10% below forecast.
Premier, which is presently bringing the Catcher field to first production, however, depends on its already established fields and in July it told investors it was producing ahead of guidance, flowing 82,100 boepd versus a target of 75,000 boepd.
A pre-results update in July, Premier said that on average each barrel of oil collected cost Premier around US$14.70 during the first half, an 11% decrease on the prior period. As a result, Premier lowered its full-year capex guidance to US$325mln (from US$350mln).
Premier added that it was cash flow positive in the first half which allowed it to reduce its net debt to US$2.7bn and it expects this deleveraging to accelerate as Catcher completes and money starts to roll in from its disposal programme.
Naturally, investors will also want to find out more about Zama, the potentially game changing new billion barrel discovery offshore Mexico.