TIDMPMO
RNS Number : 4081H
Premier Oil PLC
15 November 2018
Premier Oil plc
("Premier" or "the Group")
Trading and Operations Update
15 November 2018
Premier today provides a Trading and Operations Update for the
period to 15 November 2018.
Highlights
-- Year-to-date production of 78.4 kboepd, up from 76.2 kboepd
in the first half; forecast full-year production at around 80
kboepd
-- Record Catcher Area production rates of over 70 kboepd
(gross) frequently achieved; contractual oil production rate
expected to increase from 60 kbopd (gross) to 66 kbopd (gross)
shortly
-- Tolmount Main gas project progressing to plan with platform
construction to start in December; high value Tolmount East
appraisal well scheduled to spud mid-2019
-- Zama discovery (Mexico): pre-unitisation agreement approved;
delivery of rig taken with first appraisal well to spud later this
month
-- 3D seismic acquisition across Andaman II (Indonesia) to
commence by year-end; 3D seismic across Block 30 (Mexico) and the
Greater Tolmount Area (UK) planned for 2019 1H
-- Babbage Area (UK) disposal on track to complete by year-end;
Pakistan sale also expected to complete around year-end with
government approval now received
-- Forecast 2018 operating costs unchanged at $17-$18/boe;
forecast development, exploration and abandonment expenditure now
$365 million, reduced from previous guidance of $380 million
-- Net debt reduced to $2.52 billion at 31 October; year-end net
debt forecast at around $2.4 billion with covenant leverage ratio
forecast to fall to 3x EBITDA, in line with guidance
Tony Durrant, Chief Executive, commented:
"Premier is now generating significant free cash flow. Our
portfolio is currently producing 85-90 kboepd, our low cost base
has been maintained and our capital spend is tightly controlled. We
are on track to deliver material debt reduction in 2018 through
2019, substantially improving our balance sheet. We look forward to
the appraisal of our world class Zama discovery, starting later
this month, and the commencement of construction activities for our
high value Tolmount gas project in December."
Enquiries
Premier Oil plc Tel: 020 7730 1111
Tony Durrant, Chief Executive
Richard Rose, Finance Director
Camarco Tel: 020 3757 4983
Billy Clegg
Georgia Edmonds
Production and development operations
Group production year-to-date has averaged 78.4 kboepd, compared
to 76.2 kboepd for the first half. Current production is running at
85-90 kboepd, driven by higher Catcher Area production and
outperformance from the Chim Sáo field.
Forecast full-year production is around 80 kboepd in line with
guidance of 80-85 kboepd, previously revised to include a full year
of production from Pakistan.
Current production from the previously announced UK and Pakistan
disposals is c. 8 kboepd.
kboepd 1 January - 13 November 1 January - 13 November
2018 2017
Indonesia 13.3 14.0
Pakistan 5.2 6.6(1)
UK 44.3 41.0
Vietnam 15.6 15.0
------------------------ ------------------------
Total 78.4 76.6
------------------------ ------------------------
(1) Includes 274 boepd from the Chinguetti field in Mauritania
which ceased production in December 2017
UK
Premier's operated Catcher Area averaged 19.4 kboepd (net) for
the period and 26.5 kboepd since June reflecting strong reservoir
performance offset by lower than anticipated operating efficiency
as commissioning of the facilities was completed.
The 18(th) well, a Burgman producer, was completed in October
concluding a highly successful three-year drilling programme with
well productivity significantly higher than forecast. In addition,
dynamic data continues to demonstrate good connectivity within the
high quality reservoirs and strong pressure support provided by the
aquifer and injector wells.
Operating efficiency from the Catcher FPSO has improved with the
plant producing on every day over the last month at an average rate
of around 65 kboepd (gross). Premier expects to reach agreement
with the FPSO provider to increase the contractual oil production
rate from 60 kbopd (gross) to 66 kbopd (gross) shortly.
Production from the Elgin Franklin Area exceeded expectations
averaging over 7 kboepd year-to-date driven by outperformance from
the new wells, successful remedial work on existing wells and
continued high operating efficiency.
Elsewhere in the UK, the Huntington field averaged 5.4 kboepd,
lower than forecast due to an extended summer maintenance programme
and a subsequent shutdown due to issues with the dehydration system
which have now been resolved. The offshore plant was successfully
modified to facilitate gas import which, together with the recent
conversion of a former production well to a water injector, is
expected to improve plant stability and reservoir deliverability.
The field is currently producing over 7 kboepd.
Premier's other UK assets have performed broadly in line with
expectations.
Asia
In Vietnam, Premier's operated Chim Sáo field continues to
outperform with production averaging 15.6 kboepd, up on the prior
corresponding period and above budget. This strong performance was
driven by high operating efficiency of around 95 per cent and
on-going well intervention programmes offsetting natural
decline.
Premier's Indonesian gas fields delivered 13.3 kboepd, in line
with budget but a reduction on the prior corresponding period due
to the sale of the Group's interest in the Kakap field in
April.
Developments
On Natuna Sea Block A, in Indonesia, the development of the
Premier-operated Bison, Iguana and Gajah-Puteri (BIG-P) gas fields
continues within budget and on schedule. Installation of the Naga
and Pelikan deck extensions was completed at the end of September
while the fabrication of the subsea structures commenced in
October. Drilling of the BIG-P development wells is expected to
start in early 2019 ahead of first gas later in the year.
The development of the Tolmount Main gas field is progressing to
plan. Rosetti Marino has completed the award of the main long lead
packages for the platform and first steel is on track to be cut in
December. The drilling contract was awarded to Ensco in September
with the first of the four development wells scheduled to come
on-stream during Q4 2020.
In the Falkland Islands, the focus remains on securing funding
for the Sea Lion project, ahead of a final investment decision. In
parallel, Premier continues to work with its selected contractors
to complete FEED and to progress from Letters of Intent to fully
termed contacts, which will be executed at project sanction.
Exploration and appraisal
In September, the Mexican authorities approved the Zama
pre-unitisation agreement between Pemex and the Block 7 partners as
well as the Block 7 Zama appraisal programme.
The first Zama appraisal well is on track to spud at the end of
November and will be drilled to the north of the Zama discovery
well to confirm the oil water contact. The well will be deepened to
test the Marte prospect and also side tracked, with the side track
being flow tested. The second appraisal well will evaluate the
southern part of the Zama oil field and will complete the Block 7
appraisal programme during Q3 2019. It is anticipated that Pemex
will spud the Asab-1 well in Q1 2019 to test the extension of the
Zama structure onto their block.
Elsewhere in Mexico, Premier plans to acquire 3D seismic across
Block 30, which contains the high impact Wahoo prospect, and to
reprocess the existing 3D seismic over Blocks 11 and 13 in the
Burgos basin in 2019.
In Indonesia, on the Premier-operated Andaman II licence, the
acquisition of an extensive 3D seismic survey is scheduled to
commence by the end of the year.
In the UK, preparatory work is underway ahead of drilling the
high value Tolmount East appraisal well scheduled for mid-2019. In
addition, Premier plans to acquire 3D seismic across the Greater
Tolmount Area in the first half of 2019 to enable maturation of the
Tolmount Far East well location.
Portfolio management
During the period, Premier completed the previously announced
sales of its interests in the Kakap field and its 30 per cent
non-operated interest in the Esmond Transportation System for total
cash proceeds of $22.9 million (after working capital adjustments).
Premier also received $2.5m from Dyas, triggered by the approval of
the Arran field development plan by the OGA in October.
Premier continues to expect the previously announced sale of its
interests in the Babbage Area to complete before year-end and to
receive net cash proceeds of U$64.3 million, before customary
working capital adjustments.
In November, the Pakistan government approved the $65.6 million
sale of Premier's Pakistan interests to Al-Haj. Further deposits
have been paid by the buyer and completion of the transaction is
now expected around year end.
Finance
Premier has taken advantage of the improved oil price
environment to increase its hedging position in 2019 to protect
future free cash flows and covenant compliance. The Group's current
hedge position to the end of 2019, representing over 30 per cent of
forecast oil entitlement production, is as follows:
Oil swaps / forwards 2019 1H 2019 2H
Volume (mmbbls) 3.5 2.8
-------- --------
Average price ($/bbl) 69.1 72.0
-------- --------
Premier has also sold forward 40 million therms of its 2019 UK
gas volumes at an average price of 60 pence/therm. In addition,
Premier has hedged part of its 2019 and 2020 Indonesian gas
production through the sale of 150,000 MT and 105,000 MT of HSFO
Sing 180 at an average price of $394/MT and $387/MT
respectively.
Over the period operating costs averaged $17.1/boe. Full-year
guidance for operating cost per barrel of oil equivalent of $17-$18
is maintained. Forecast 2018 full year development, exploration and
abandonment spend is now $365 million, reduced from previous
guidance of $380 million, due to phasing of appraisal and
abandonment expenditure.
Net debt reduced from $2.72 billion at the end of 2017 to $2.52
billion as at 31 October. Premier continues to forecast year-end
net debt of around $2.4 billion, with covenant leverage ratio
expected to fall to 3x by year-end 2018 and reducing further in
2019, in line with guidance.
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END
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