Premier Oil's shares bump higher as production reaches a record level

 
Courtney Goldsmith
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Cabinets From Both UK And Scottish Governments Meet In North East Scotland
Premier Oil's Catcher oilfield was under budget and ahead of schedule (Source: Getty)

Shares in Premier Oil lifted today as the firm produced a record amount of crude and pledged to cut debt in the year ahead.

The figures

Premier reported a loss before tax of $366.3m (£265.1m) in the year to December 2017, down from a $413.9m loss the previous year, while it produced a record 75,000 barrels of oil equivalent per day (boepd), up from 71,400 boepd.

The firm expects to produce between 80,000 and 85,000 boepd next year, which Malcolm Graham-Wood, analyst at Hydrocarbon Capital said was "very conservative", adding that they were "promises made to be broken".

The company only reduced its huge $2.7bn debt pile by about $40m over the year, but cash flow rose to $496m from $431.4m, driven by higher production and sales volumes.

Shares in the firm rose 5.65 per cent to 74.96p in late afternoon trading.

Why it's interesting

The 2017 financial year was a big one for Premier, with its Catcher field in the North Sea producing first oil in December. The field is expected to pump out peak gross production of 60,000 boepd by April ahead of schedule.

Premier's other big project, the "world class" Zama discovery offshore Mexico, has potential reserves of up to 800m barrels. The firm could drill its first appraisal well in the second half of 2018 or early 2019.

The firm's next major project in the North Sea after Catcher will be its Tolmount gas project, which Premier expects to receive final approval for in mid-2018, and Durrant told City AM in January that he would like to make a UK acquisition if the right opportunity came about.

What Premier said

Chief executive Tony Durrant said:

2017 was a successful year for Premier with the refinancing completed, our producing portfolio performing well, the Catcher field brought on-stream and the notable Zama oil discovery in Mexico.

2018 will see further production growth, allowing us to deliver on our plans for reducing net debt to restore balance sheet strength while also progressing projects that deliver the highest financial returns.

Read more: Premier Oil looks to ramp up North Sea production