Premier Oil said their full year production would be at the upper end of their previous guidance in this morning’s trading update, prompting shares to jump nearly three per cent.
The company said that total output for the year would be closer to 80 kilo barrels of oil per day, having averaged 79.4 kilo barrels for the first ten months of the year.
The London-listed firm added that its Catcher Area project in the North Sea had now fully paid for itself, with an operating efficiency of almost 100 per cent.
The project, which Premier owns a 50 per cent share in, came on stream 22 months ago.
It also said it had reduced net debt $300m to $2.03bn as of 31 October, meaning it is on track to meet full year net debt reduction guidance targets of more than $300m.
Why it’s interesting
The oil producer has a number of new projects in the pipeline which have the potential to add significantly to the company’s net production.
Tolmount, in the south of the North Sea, is scheduled to produce its first gas by the end of 2020 and is forecast to add 20 to 25 kilo barrels per day to group production.
Likewise, the sale of Premier’s block 7 Zama field in Mexico has garnered significant attention, presenting serious potential for further balance sheet risk reduction.
Analysts at Jefferies welcomed the update, saying that Premier “continues to build the argument for a material re-rating within a UK sector starved of success.”
What Premier said
Chief executive Tony Durrant commented on the results:
“We continue to deliver on our strategic priorities. We are generating significant free cash flow, which is materially deleveraging our balance sheet.
“At the same time, we are actively managing our portfolio and selectively progressing growth projects at the right exposure. We also continue to create value through the drill bit and to build material new positions in emerging exploration plays at low cost.”
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