Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Premier warns of charges and impairments of up to £480m, new Solan well to provide boost

Premier's North Sea assets include the Solan field.
Premier's North Sea assets include the Solan field.

Premier Oil expects to book charges and impairments of up to £480 million, and a 40% drop in revenues, in its upcoming half-year results due to lower oil and gas prices.

London-listed Premier said it would have to “derecognise a portion of the value” of its £3.3 billion UK tax losses and allowances, resulting in a “non-cash charge” of £235-400m.

A “non-cash, post-tax impairment” of £40-80m on other assets is also on the cards, the firm said in a trading update.

It expects to rack up revenues of £420m for the first six months of 2020, down from £690m in H1 2019.

The company has managed to secure cost savings of £190m for the full-year, while reducing net debt to £1.56bn from £1.58bn at the end of last year, despite lower prices.

Premier recently renegotiated a deal to buy BP’s stakes in the Andrew and Shearwater fields in the North Sea.

The firm is working with creditors to agree a long-term extension to its credit maturities, after which it will announce the terms of the equity funding for the BP acquisition.

Both parties hope to complete the transaction by the end of September.

Premier also scrapped a deal with Dana Petroleum to increase its stake in the Tolmount field to 75% from 50% currently.

Tolmount, in the southern North Sea, remains on course to meet its revised first gas timeframe of the second quarter of 2021, with the jacket and topsides — being built in Rosetti’s yard in Italy – to be loaded out later this month prior to sailaway in August.

In other positive news, a third production well on the Solan field, west of Shetland, will come on stream in September, adding 10,000 barrels of oil per day, as Premier sticks to its revised full-year production guidance of 65-70,000 bpd.

Output from the Catcher area in the central North Sea was impacted by an unplanned 20 day outage in the second quarter.

And Premier decided to cease production from “certain low rate fields” which are “not generating positive cash flows in the current environment”, namely Huntington and Kyle, with final production Balmoral Area planned for October 2020.

Chief executive Tony Durrant said: “The continued underlying performance of our core assets along with the decisive action we have taken to reduce our expenditure during the first half has resulted in our net debt remaining broadly flat despite significantly weaker commodity prices during the period.

“This, together with the expected agreement on the amendments to our credit facilities and the completion of the value-accretive BP acquisitions, positions us well to benefit from a recovering oil price.”

Stuart Lamont, investment manager at Brewin Dolphin Aberdeen, said: “The re-negotiation of the BP deal earlier this year relieved some of the pressure on Premier Oil – subsequently, its shares have risen from a low of around 12p to north of 40p over the last few months.

“The perennial issue for Premier is debt, which has remained more or less flat – a decent result in the context of a low oil price. Substantial cost savings are another positive from today’s update.

“However, the future direction of the oil price will have a large bearing on Premier’s prospects and there are still conversations to be had with lenders around its long-term financing, on which investors will be looking for newsflow in the months ahead.”

Recommended for you

More from Energy Voice

Latest Posts