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Premier Oil beats debt reduction expectations in year of strong production

Premier’s net debt at the end of 2018 amounted to US$2.3bn, marking a US$390mln reduction during the twelve months

oil and gas operations
Production grew by 7% and by late 2018 was at record levels

Premier Oil PLC (LON:PMO) has revealed that it exceeded its debt reduction target for 2018 by around US$100mln, whilst also updating further on its year of production growth.

The oiler, which is due to release full-year results on 7 March 2019, confirmed previously announced indications that it had increased output by 7% during 2018 with the full year average rate reported at 80,500 barrels oil equivalent per day.

Output was measured above forecast at 92,000 boepd in November and December.

READ: Premier Oil sees record production volumes

In 2019, Premier is forecasting average production of 75,000 boepd, reflecting the impact of asset sales agreed in 2018 but also an increase for the retained underlying assets.

Premier’s net debt at the end of the year amounted to US$2.3bn marking a US$390mln reduction during the twelve months and coming in ahead of the company’s US$2.4bn target.

"Our strong operational performance and disciplined expenditure have enabled us to reduce our debt levels ahead of forecast,” said Tony Durrant, Premier chief executive.

It also spent less than targeted on projects, with full-year capital expenditure reported at US$355mln verses US$365mln and similarly operating costs for the year were below guidance, with the metric marked at US$16.9 per barrel oil equivalent.

In terms of operations, Premier highlighted that the Catcher field was producing at an increased rate at 66,000 bopd gross (Premier owns 50% of the asset).

Upcoming operations

Also, the now-in-development Tolmount project is expected to see the spud of the ‘high value’ Tolmount East appraisal well by mid-2019.

Appraisal work is also underway for the large Zama discovery offshore Mexico, and, Premier said the Zama-2 well results are “expected shortly”.

It noted that 3D seismic operations are anticipated across its portfolio through the first half of the year – with programmes scheduled in the Andaman Sea offshore Indonesia, at Block 30 in Mexico and across the Greater Tolmount Area in the UK North Sea.

Durrant highlighted: “we have continued to build our portfolio for the future, sanctioning our high-value Tolmount Main gas project and capturing highly prospective new acreage in Mexico and Indonesia.  

“Looking to the year ahead, we have a strong production base which is well hedged and our priority remains to further reduce our debt levels while progressing our future growth projects to final investment decisions." 

Quick facts: Premier Oil PLC

Price: 85.1 GBX

LSE:PMO
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Market Cap: £707.53 m
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