Premier Oil reduced its production guidance this morning as the oil explorer prepares for its merger with fellow North Sea firm Chrysaor.
The London-listed firm said output for the full year would now be 61,000 – 64,000 barrels per day for the year, down from previous forecasts of 65,000 – 70,000 barrels.
Recent problems at its Catcher oil field off the east coast of Scotland were to blame for the decline, it said.
The update comes after the company announced that it would merge with Chrysaor back in October.
The combined entity will become London’s largest independent listed oil company, with total production of nearly 240,000 barrels per day.
Shares in the firm rose 14.9 per cent in the morning’s trading.
Premier Oil chief executive Tony Durrant said that the deal was set to complete by the first quarter of 2021.
“The merger, which will create a combined group with diversity, scale and balance sheet strength, is progressing to plan”, he said.
A proposal for the merger will be published in December, he confirmed in today’s trading statement.
Brewin Dolphin investment manager Stuart Lamont said that today’s update marked the “end of an era” for Premier Oil.
“Although shareholders in Premier will be heavily diluted by the deal, they will have a stake in a much stronger, well-balanced business with greater scale and prospects for future growth”, he added.
“Premier had long struggled with a significant debt pile, which was exacerbated by the oil price’s volatility in recent years, and the economic challenges caused by Covid-19 proved the final straw for the company.”