Energy Voice | Premier Oil completes pipeline sale, board sanctions Tolmount

Premier Oil said today that it had completed the £17.3 million sale of its 30% stake in a North Sea pipeline system.

Premier first announced its plans to sell the Esmond Transportation System to CATS Management in December.

Meanwhile, the company’s board approved the Tolmount southern North Sea gas field development project in June.

Formal sanction by partners is scheduled for the third quarter.

The London-listed firm has also reduced its net debts to £2 billion at the end of June, from £2.05bn at the end of 2017.

Full year net debt reduction is estimated at between £225-£300m.

UK production dropped slightly to 41,100 barrels of oil equivalent (boe) per day in the first half of the year.

The company had pumped out 45,500 boe per day in the same period a year ago.

First half production was impacted by planned shutdowns at the Huntington and Solan fields, Premier said in a trading update.

The Catcher field, which started production in the North Sea in December, started consistently producing 60,000 barrels of oil per day in May.

Premier’s full year group production guidance is unchanged at 80-85,000 boe per day.

An appraisal programme for the huge Zama discovery off Mexico is expected to get under way in the fourth quarter.

Premier chief executive Tony Durrant said: “Catcher delivering stable plateau production is an important milestone for Premier.  This, coupled with the ongoing strong performance from our underlying portfolio and our continued focus on cost control, will result in significant free cash flow generation and material debt reduction in the second half.

“We can also look forward to the formal sanction of our high value Tolmount project and the appraisal of our world class Zama discovery, both of which have the potential to deliver significant future growth.”

Alasdair Ronald, Senior Investment Manager at Brewin Dolphin Glasgow, said: “In recent months financial institutions have become increasingly positive on the prospects for Premier Oil and their growing confidence has been justified by today’s trading statement.

“The reduction of debt has been a focus of management and the news on this will have been well received.

“Analysts will also have been heartened with the news that the group remains on track to deliver on previous guidance and this could be increased after the summer maintenance programmes have been completed.

“While the company remains positive on prospects for the oil price, it must be remembered that Premier Oil is a leveraged play and the price of oil will be a major factor affecting future profitability.”

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