Premier Oil boss this morning said the firm was making strides towards a cash positive year.
Chief executive Tony Durrant said his firm was “ahead of plan” as it battles to decrease its debt and move its flagship Catcher project to first oil.
“Premier’s strong operational performance continued into 2017,” he said.
“Production is above budget, the E.ON transaction has already reached payback, costs continue to be managed downwards and Catcher is on track for first oil later this year. We plan to be cash flow positive in 2017 with more significant debt reduction in 2018. We look forward to the spudding of the Zama prospect in Mexico, a potentially transformational well for Premier. Our refinancing, shortly to be completed, incorporates a plan for net debt reduction and, over time, selective investment in new projects. We are ahead of plan.”
Production averaged 82.6 kboepd for the first quarter of the year – up 44% on the previous quarter. The company’s operating costs total $13.7/boe, which is 11% below budget. Full year capex guidance has reduced from $390million to $350million.
UK production averaged 45.7 kboepd, up 160% on the prior corresponding period as a result of a full contribution from the former E.ON assets and the Solan field.
The purchase of the E.ON portfolio, which cost $120 million, reached payback in April 2017, earlier than anticipated as a result of stronger production and higher commodity prices.
The Catcher project is expected to reach first oil later this year. Total capex forecast remains at $1.6 billion, 29% lower than the sanctioned estimate.
A spokesperson added: “Good progress is being made on the FPSO with the construction work for the installation and integration of the topsides complete while the construction scope in the hull is nearing completion. Commissioning is underway and this will continue up until sailaway. 10 wells (seven producers and three injectors) have been drilled to date and a short subsea campaign is scheduled to commence in June to tie in the four recently completed Varadero wells. As a result of the positive drilling results, Premier is optimistic that a higher plateau production rate can be achieved and a review is underway to understand the potential additional production capacity available from the FPSO.”
Premier’s net debt continues to sit at $2.8billion. As of 30 April, cash (including joint venture balances) and undrawn facilities stood at around $585million. Premier continues to expect to be cash flow positive after capex and planned disposals in 2017 at oil prices above $50/bbl, driving net debt reduction.
Its refinancing implementation is underway with all requisite lock-ups achieved. The company’s Court Schemes of Arrangement will formally commence today.