Premier Oil slashes $20m off N. Sea investment spend to pay down debt

Oil minnow Premier Oil has chopped $20 million off its North Sea oil exploration budget.

In a trading update yesterday, the Edinburgh-registered explorer announced its 2017 capital expenditure for 2017 was $305 million compared to the $325 million it had earlier forecast.

And Tony Durrant, Chief Executive, also confirmed that its planned investment in exploration in 2018 will remain flat – at around $300 million.

Whilst this will be welcomed by shareholders, it is also indicative of a ‘lower for longer’ cap-ex outcome from the crude oil price slump over the past three years.

Average operating costs for 2017 fell to $16.5-barrel. Premier expects this to creep up towards $18-barrel this year as a result of changes in the portfolio.

Durrant added: “As our Catcher field ramps up production to 60,000 bopd, 2018 will bring higher production and cashflow – accelerating our debt reduction programme.

“Alongside this, our portfolio of future projects is being progressed for selective investment and further growth.”

Meanwhile, Rockhopper – a fellow oil minnow and Premier Oil’s partner in the $1.5 billion Sea Lion field in the Falkland Islands – is making ‘good progress’ in its licensing negotiations with the islands’ government.

Sam Moody, Chief Executive, Rockhopper, said yesterday: “”We are pleased to be able to start 2018 by reporting on the material progress we have made alongside partner Premier in moving forward many aspects of the Sea Lion project in recent months.

“We have entered into exclusive arrangements with a number of the key contractors to the Sea Lion field and are hopeful of entering more during the first quarter of 2018.

“This news, alongside good progress with the Falkland Islands Govt. on the final development plan represents good progress in taking the steps required to sanction the Sea Lion development by the end of this year.”

12 Jan 2018