Ramped up production allows Premier Oil to pay down debt and lift forecasts

Courtney Goldsmith
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Premier Oil hit "record" production in the first half (Source: Getty)

Premier Oil raised its production forecast and paid down some of its huge debt pile on the back of strong operational performance in the first half of 2017.

The figures

In the six months to the end of June, Premier produced a record 82,100 barrels of oil equivalent per day (boepd), up 34.5 per cent on the previous year.

As a result, the firm raised its full-year production guidance to between 75,000 boepd and 80,000 boepd, up from a previous forecast of 75,000 boepd.

The company's free cashflow increased to $292m from $109m the previous year, and net debt was reduced to $2.74bn from $2.77bn at the end of 2016.

Premier made a loss before tax of $3.6m compared with a profit of $99.3m the previous half-year.

The firm's share price rose around two per cent at the market open, but at the time of writing shares had fallen 0.62 per cent to 56.4p.

Why it's interesting

The North Sea-focused producer has been working to cut down debt through an ongoing disposal programme following the completion of a refinancing package last month.

Earlier this week, Premier announced it was selling its nearly 34 per cent stake in the biggest onshore oilfield in western Europe. It agreed a deal with an unnamed third party to sell its entire stake in the Wytch Farm field for $200m.

The firm has also made progress on its Catcher field in the North Sea, which is set to come on stream by the end of 2017.

Premier is targeting further debt reduction at the end of the year at current oil prices, and that will increase once Catcher is producing.

Read more: Premier Oil shares surge on 'world class' oil discovery offshore Mexico

​What Premier Oil said

Tony Durrant, chief executive, said the company continues to deliver "excellent" operational performance, which will drive free cash flow and the reduction of net debt.

The first half saw good progress on the Catcher and Tolmount projects, a world class exploration success in Mexico and the acceleration of cash flow from disposals.

Following the successful completion of our refinancing, we are ahead of plans to restore financial strength while progressing a number of exciting projects for future growth.

Read more: Premier Oil pumps up oil production and cuts costs in the first half

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