Chief executive Tony Durrant, in today’s financial results, boasted of the growing oil producer’s recent success.
Output for the twelve months, to December 31, amounted to 75,000 barrels of oil equivalent per day and, significantly, during the final month of the year it delivered the Catcher oil field to first oil.
The new North Sea oil field came online on schedule and under budget. A very large (600mln barrels) discovery offshore Mexico provided another of the year’s operational highlights.
In London, Premier Oil shares were up 4.8p or 6.77% changing hands at 75.75p.
Royal Bank of Canada analyst Nathan Piper upgraded the bank’s rating to ‘outperform’ from ‘sector perform’ and with a 100p price target he sees material upside to the current price.
“The FY17 results underline the progress made by the business last year; refinancing and delivering first oil from Catcher,” Piper said.
“Premier remains one of our preferred deleveraging stocks and following recent share price weakness we are upgrading to Outperform ahead of material debt repayment H2/18 as production ramps up from Catcher and capex tapers.”
Improving cash flows
Premier today reported a 15% improvement in cash flows from operations, up to US$496mln, as it maintained a low cost base and enjoyed improved output volumes and crude prices.
Free cash flow came in at US$71.2mln, and Premier achieved earnings (EBITDAX) of US$589.7mln up from US$494.1mln in the preceding year).
The oil firm made a net loss of US$589.7mln, after non-cash impairments and one-time fees related to its refinancing. Premier ended the year with its debt reduced, standing at US$2.7bn.
Looking ahead, the company is expected production between 80,000 and 85,000 boepd, with the Catcher field expected to yield some 60,000 boepd gross by April.
It anticipates further improvements to free cash flow, to drive debt reduction through 2018 and 2019.
Durrant said: “2017 was a successful year for Premier with the refinancing completed, our producing portfolio performing well, the Catcher field brought on-stream and the notable Zama oil discovery in Mexico. 2018 will see further production growth, allowing us to deliver on our plans for reducing net debt to restore balance sheet strength while also progressing projects that deliver the highest financial returns."