TIDMPMO
RNS Number : 4312F
Premier Oil PLC
12 November 2015
PREMIER OIL plc
("Premier" or "the Company")
Trading and Operations Update
12 November 2015
Premier today provides the following trading update for the
period 1 January to 31 October 2015.
Highlights
-- Production averaged 57.5 kboepd year to date; ahead of full year guidance of 55 kboepd
-- Solan on track for first oil before the year end, subject to weather
-- The Catcher project remains on schedule and on budget;
successful 2015 subsea programme completed; initial development
drilling results encouraging
-- Pre-FEED work on Sea Lion complete, world class preferred contractors selected
-- Cost reductions of over 25% delivered for 2015 in operating
costs and G&A spend; further cuts forecast for 2016
-- Significant liquidity with cash and undrawn bank facilities
of $1.2 billion; year-end covenant headroom forecast to be in
excess of $700 million
Tony Durrant, Chief Executive, commented:
"Premier continues to benefit from stable production and
valuable hedging contracts. Commissioning on the Solan project
progressed well during good autumn weather and the field remains on
track for first oil by year-end. The Catcher project is on schedule
and on budget. Looking ahead, we see reduced capital expenditure
and significant cost reductions for both our current and future
projects to mitigate the current oil price environment."
Enquiries
Premier Oil plc Tel: 020 7730 1111
Tony Durrant
Richard Rose
Bell Pottinger Tel: 020 3772 2570
Gavin Davis
Henry Lerwill
Production operations
Production for the ten month period to 31 October averaged 57.5
kboepd (2014: 64.0 kboepd) in line with expectations. High
operating efficiency continued across the portfolio and with the
summer maintenance activities successfully completed, the group
remains on track to deliver full year production ahead of its
current guidance of 55 kboepd.
The Premier-operated Chim Sáo field in Vietnam outperformed,
with high uptime and better than predicted reservoir performance.
Following an extended shutdown to repair the firewater swivel on
the FPSO, production returned to expected levels from the end of
August. In the UK, all fields are producing broadly in line with
expectations, with the high production efficiency achieved since
the resumption of unconstrained production earlier in the year
continuing at Huntington. In Indonesia, production from the
Premier-operated Natuna Sea Block A remains stable with higher gas
demand for GSA 1 and GSA 2 from the Anoa and Pelikan fields, offset
in part by lower production from the non-operated Kakap field.
Kboepd 1 January - 1 January -
31 October 31 October 2014
2015
------------- ------------ -----------------
Indonesia 13.8 14.5
Pakistan &
Mauritania 10.3 13.1
UK 16.4 20.0*
Vietnam 17.0 16.4
------------- ------------ -----------------
Total 57.5 64.0
------------- ------------ -----------------
*includes production from Scott field disposed of in December
2014
For 2016, group production will reflect some natural decline in
our existing production portfolio, offset by new production from
the Solan field. Further guidance will be provided in our January
Trading and Operations Update.
Development projects
Premier continues to anticipate first oil from Solan before the
end of the year, as previously guided. Good offshore productivity
and high uptime has been achieved with the Regalia flotel during
September and October. Commissioning of the offshore installation
systems required for first oil is progressing as planned. Timing of
completion of this activity is dependent on weather conditions. A
number of the critical path platform systems have now been
successfully commissioned including the firewater deluge system and
other safety-related systems. As a result, all material
construction work for first oil is now complete; the subsea
infrastructure is now commissioned; and all the utilities including
power, fuel supply and air are ready for first oil. Tanker trials
work started on the 10 November and the Superior flotel is
contracted to arrive on the 20 November to replace the current
Regalia flotel. Full habitation of the platform accommodation is
expected when the Superior flotel arrives.
The first pair of producer-injector wells required for first oil
have been successfully tied in. Drilling of the second producer
well commenced in July completing over 1000 feet of the reservoir
section. However, during drilling of the remaining reservoir
section technical difficulties were encountered and the well has
been suspended. The Ocean Valiant rig is currently drilling the
second injector well. It is anticipated that the second producing
well will now be side-tracked in Q2 2016. This will have no impact
on first oil from the Solan field and expected plateau production
remains 20-25 kboepd when both pairs of wells are on-stream. Cash
spend to 31 October on the Solan project stood at $1.76
billion.
On the Catcher project, the subsea installation work planned for
2015 is complete with the successful installation of the pipeline
end manifold and tow templates at Burgman and Varadero. In
addition, the 60 kilometre gas export pipeline was successfully
laid during July with minimal weather downtime. Fabrication of the
subsea flowline bundles and associate towheads, the buoy and the
mid water arches (riser buoyancy aids) is on schedule; these will
be installed in the summer of 2016.
Drilling activities which started in July using the Ensco 100
rig are progressing well. Two wells have been drilled to date, both
of which were ahead of schedule and under budget. Operations on the
first Catcher water injection well (CTI1) were completed with good
operational performance and reservoir results. The second water
injector on Catcher (CCI2) has been drilled to total depth and is
now in the final phase of completion.
Fabrication of the FPSO hull and topsides is on-going in Asia.
The mitigating actions put in place to address the scheduling
issues associated with the construction of the hull by the FPSO
contractor BW Offshore are being delivered, and so helping to
safeguard the sail-away date of the FPSO. Topsides module
construction is progressing well in Batam and Singapore. The
project remains on schedule for first oil in 2017.
In the Falkland Islands, Premier continues to mature the
development plan for the Sea Lion Phase 1a and pre-FEED work is now
complete. The designs of both the FPSO and the Subsea System have
evolved, tendering exercises have been completed and a set of world
class preferred contractors has been selected for the provision of
these facilities. Premier will work with these contractors during
FEED to finalise the fabrication plans for the facilities, and will
also select the drilling and well service contractors. Premier is
currently in discussions with its joint venture partner and the
Falkland Islands Government to decide upon the start date and
duration of the FEED programme. Development financing arrangements
will be progressed during FEED, and this work will include a farm
down process to bring in an additional upstream partner. Premier
expects to provide a full update on progress of its Sea Lion
project in Q1 2016, after completion of the exploration
programme.
In Norway, on the Premier-operated Vette project, extensive
project rework and market engagement has generated very competitive
offers of commercial terms from the supply chain. Two alternative
development concepts have been validated and final selection of the
preferred host facility for the Vette field development will be
made before year-end 2015, in preparation for project sanction
decision in 1H 2016.
In Indonesia FEED has been completed on the next generation of
developments for Natuna Sea Block A: Bison, Iguana and Gajah
Puteri. These projects will backfill our existing Singapore and
domestic market contracts and an investment decision will be made
in Q4 2016.
Exploration and appraisal
Premier's four-well North Falklands Basin campaign had a strong
start earlier in the year with two discoveries from the first two
wells: Zebedee, which added 50 mmbbls of resource to a potential
Phase 2 development of Sea Lion, and Isobel Deep which was the
first test of the Isobel/Elaine fan complex in the previously
unexplored southern part of PL004. The Eirik Raude rig is in the
process of completing operations in the South Falklands basin and
is expected to be on hire shortly. Following discussions with our
partners and the Falkland Island Government, Premier now intends to
re-drill the Isobel/Elaine complex (unrisked mean resource
400mmbbls), replacing drilling of the Jayne East prospect in PL004,
with results expected early next year. Premier will then drill the
Chatham exploration target in PL032 as planned, which will also
appraise the expected gas cap in the west of the Sea Lion
field.
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