Premier Oil increases spending as it eyes jump in production

BRITISH oil producer Premier Oil expects a significant jump in production this year, as it increases its spending to $1.1bn (£688m).

Output ramped up by 43 per cent last year as Premier reported average production of 57,000 barrels of oil a day, up from 40,400 barrels a day in 2011.

Production guidance for this year is in the range of 65,000 to 70,000 barrels of oil a day. Premier added that it would drill at least 14 wells this year, targeting more than 200m barrels of prospective oil.

Premier Oil, whose operations span the UK and Asia, said that total revenues for last year are expected to come in at $1.4bn, up from $826.8m in 2011.

Meanwhile, it has increased its capital expenditure from $730m in 2012 to a total of $1.1bn this year, with $900m spent on development and a further $200m on exploration.

However, the FTSE 250 firm said yesterday that it would take a hit of $160m for exploration write-offs.

Numis analyst Sanjeev Bahl said that the statement contained “little in terms of surprises”.

“We believe that Premier needs to demonstrate its ability to meet/beat production guidance, and higher exploration success rates in order to re-rate,” he added.

Premier Oil shares fell 1.29 per cent yesterday, closing at 366.4p.