Production continues at company-record levels meanwhile Premier is making bold moves to cut-debt and position its growth projects.
Premier Oil PLC (LON:PMO) reported a ‘strong performance’ in its production business and gave some insights into its evolving growth plans.
Along with an Alaskan team up with AIM-quoted explorer 88 Energy Plc (LON:88E) the company today revealed that it has initiated a formal sale process for the Zama asset, which after its latest upgrade is now estimated to host some 810mln barrels of crude.
Group production averaged 84,100 barrels of oil equivalent per day for the first half of 2019, which was a new company record.
The company noted that the Catcher Area continued to see high plateau rates of 70,000 boepd, with operating efficiency marked at 99%.
Interim profit was reported at US$121mln, up from US$98mln from last year, while earnings (EBITDAX) totalled US$680mln, up from US$488mln.
Cash margins were marked at 35%. Free cash flow amounted to US$182mln versus a US$90mln cash outflow a year ago, meanwhile, net debt was reported at US$2.15bn reducing from US$2.33bn.
Giving its 2019 full year outlook, Premier left its guidance for 75,000 to 80,000 boepd unchanged.
Premier highlighted that operationally it expects first gas from the Bison, Iguana and Gajah-Puteri (BIG-P) gas fields before the end of the fourth quarter.
It also expects to see appraisal well results from the Tolmount East well in early in the fourth quarter.
In the Falklands, Premier continues to advance talks to finance the development of the Sea Lion field and a farm-down process has been launched.
Tying up with AIM’s 88 Energy Plc (LON:88E), Premier is taking a 60% stake in ‘Area A’ of the conventional Project Icewine acreage, on the North Slope. It is a high interest region which has seen significant nearby discoveries.
Premier will cover the costs of an appraisal well to follow up the Malguk-1 discovery which was first drilled by BP in 1991.
A formal sales process has now begun to offload the large Zama discovery, in Block 7 offshore Mexico, as Premier seeks to bolster its finances whilst retaining some exploration.
“The group’s highest priority is to further strengthen its balance sheet and, given considerable industry interest in shallow water Mexico, this has prompted Premier to initiate a formal sales process for its interest in the Zama field,” it said.
“In the success case, this will lead to a material reduction in the group’s debt levels.
“Premier retains exposure to exploration upside in Mexico through its other offshore licence interests, each of which has the potential to deliver material future value for Premier.”
The company highlighted that it has now worked up data for the Wahoo prospect, which is located within its 30% owned Block 30, and, it is targeting drilling before the end of 2020.
Additionally, it noted that it also has exploration plans for 100% owned Burgos Blocks 11 and 13 where a 3D seismic survey will complete in the first quarter of 2020.