Premier Oil enjoyed record production last year with 63.6 thousand barrels of oil equivalent per day (kboepd), an increase of 9.3 per cent on the previous year.
The company's share price though has dropped six per cent
UK production soared 30.2 per cent to 19.4 kboepd. The company expects production in 2015 from its existing assets, excluding the North Sea's Solan field, to come somewhere in the region of 55 kboepd.
Thanks to the low oil price Premier has delayed 2015 discretionary drilling expenditure. The company plans to drill eight wells this year. Total revenues for 2014 will be around $1.6bn. Planned development spend for 2015 is expected to be 40 per cent lower than last year and will take a $300m impairment charge.
Why it's interesting
The collapsing price of oil has hit major producers hard. Crude now trades at below $50 per barrel, creating the toughest climate the sector has seen in years. It's widely believed there is still room for the price of oil to fall further.
Premier rivals Cairn Energy and Tullow Oil are also presenting market updates. Oil companies will want to hold off on big spending projects as the price of oil continues to slide. Premier Oil is making heavy investments in the North Sea. On Monday, Oil & Gas UK said the chancellor must drop taxes on North Sea oil and gas firms.
What Premier Oil said
Tony Durrant, Premier Oil's chief executive, commented:
Operationally, Premier delivered a strong performance in 2014, with production exceeding guidance, key milestones reached on a number of our development projects and non-core assets disposed of in a difficult asset market.
We will continue to invest in high quality projects only if they are robust at our conservative oil price assumptions and if their cost base reflects the current oil price environment
The sector is facing significant challenges with OPEC sticking to its guns and refusing to change output in the wake of falling prices. Premier is not as cash rich as Cairn Energy and may find it difficult to weather the price environment this year.