TIDMPMO
RNS Number : 6444W
Premier Oil PLC
16 November 2017
PREMIER OIL PLC
("Premier" or "the Group")
Trading and Operations Update
16 November 2017
Premier provides a Trading and Operations Update for the period
1 January to 31 October 2017.
Highlights
-- Production averaged 76.6 kboepd year-to-date with planned 3Q
maintenance completed; on track to meet previously increased full
year guidance of 75-80 kboepd
-- Catcher on schedule for first oil during December; FPSO
swivel and buoy successfully mated with the final rotation test
imminent and final topsides system commissioning proceeding
well
-- Heads of Terms signed for FPSO lease extension on Huntington
field, extending the life of the field
-- Government agreement signed for the sale of Tuna field gas in Indonesia to Vietnam
-- Zama appraisal: pre-unitisation discussions with Pemex
underway; likely 4 well appraisal programme commencing late
2018
-- Disposal programme ongoing including sale of Wytch Farm field
for $200 million; shareholder circular to be issued imminently
-- Forecast 2017 operating costs of c$16/bbl and gross G&A
of $150 million, below budget and in line with previous
guidance
-- Forecast 2017 development, exploration and abandonment
expenditure expected to be $300-310 million, down from previous
guidance of $325 million
-- Net debt of $2.8 billion at 30 September; debt reduction
forecast at year end, including effects of ongoing planned
disposals
Tony Durrant, Chief Executive, commented:
"Through strong production, cost control and disposal activity,
cash generation is ahead of plan. The excellent progress on the
Catcher project, combined with the recovering oil price, will
accelerate debt reduction through 2018. The agreement to export
Tuna gas to Vietnam, signed last week, adds to Premier's
significant backlog of future growth opportunities."
Enquiries
Premier Oil plc Tel: 020 7730 1111
Tony Durrant, Chief
Executive
Richard Rose, Finance
Director
Camarco Tel: 020 3757 4980
Billy Clegg
Georgia Edmonds
Production operations
Production for the ten months to 31 October averaged 76.6 kboepd
(2016: 68.2 kboepd) reflecting a period which included the now
completed planned maintenance programmes on a number of fields.
Production in October averaged 77.0 kboepd. Premier expects to
deliver within its previously upgraded full year production
guidance of 75-80 kboepd.
kboepd 1 January - 31 1 January - 31
October 2017 October 2016
------------- --------------- ---------------
Indonesia 14.0 14.0
Pakistan &
Mauritania 6.6 8.0
UK 41.0 30.1
Vietnam 15.0 16.1
------------- --------------- ---------------
Total 76.6 68.2
------------- --------------- ---------------
Premier's operated Chim Sao field in Vietnam delivered a good
production performance over the period underpinned by high
operating efficiency, strong reservoir performance and a successful
well intervention programme mitigating the natural decline from the
field. The first of a two well infill drilling programme has been
drilled and brought on-line. A second infill well will be completed
by year end. Production was also robust from Premier's Indonesian
assets which delivered 14.0 kboepd, with Natuna Sea Block A
capturing a market share of 49 per cent of GSA1 deliveries, against
a contractual market share of 47 per cent. The recent Anoa
development well (WL-5X) was brought on production in August and is
producing at 20-25 mmscf/d, helping to confirm and define the
potential of the deeper Lama zones within the Anoa field.
UK production averaged 41.0 kboepd, up 35 per cent on the prior
corresponding period, principally as a result of a full
contribution from the former E.ON assets. Scheduled maintenance
programmes were carried out during the third quarter in particular
on Huntington (average 13.5 kboped), Solan (average 6.2 kboepd),
the Elgin-Franklin area (average 5.5 kboepd) and Ravenspurn North
(average 1.3 kboepd). All works have now been completed and the
assets are performing in line with our forecasts.
Premier's operated Babbage field continues to outperform
averaging 3.1 kboped, following a successful well intervention
programme. On Huntington, a Heads of Terms has now been signed with
Teekay, the owner of the FPSO, to extend the firm charter period
for the Huntington field beyond April 2018 for a minimum of one
year with an improved rate structure.
Production from Pakistan and Mauritania averaged 6.6 kboepd in
line with expectations. The reduction on the prior corresponding
period reflects expected natural decline in all of the gas
fields.
Development projects
In the UK, the Premier-operated Catcher project remains on
schedule for first oil during December. The FPSO arrived on
location on 18 October and the production buoy was successfully
pulled into the hull. In the subsequent period the full hook-up
process has been essentially finished with the risers, umbilicals
and the installation of the ESDVs now complete. The swivel stack is
in place and the geostationary pipework connected with the final
rotation test due imminently. Testing of the offloading interface
with the cargo tanker is underway. Commissioning activities
including the running of main power generation, chemical bunkering,
system filling, shutdown system testing and system leak testing,
which commenced in parallel are ongoing and will be ready for the
introduction of hydrocarbons from the Catcher field shortly.
The development drilling programme continues ahead of schedule.
The 12 wells originally planned pre-first oil (eight producers and
four injectors) have been drilled, completed and tied back to the
FPSO and drilling activities on phase 2 of the Catcher development
wells are ongoing. The first of these phase 2 wells (CCP9)
continued the trend of delivering results on, or better than,
prognosis in terms of reservoir quality and flow rates. Total
project capex, including remaining contingency is forecast at $1.6
billion, 29 per cent lower than the sanctioned estimate.
Elsewhere in the UK, offshore and onshore FEED on the
Premier-operated Tolmount field in the Southern Gas Basin is
progressing well. Tendering of the major project scopes is underway
and proposals have been received for the pipeline, drilling rig and
platform; these are now being evaluated. Alongside the FEED
process, the draft Field Development plan has been submitted to the
OGA and the Heads of Terms signed with Dana Petroleum and CATS
Management Limited in respect of the infrastructure partnership for
the Tolmount development, is being progressed into final
documentation ready for development sanction planned for the first
half of 2018.
In Indonesia, the BIGP development project in Natuna Sea Block A
is proceeding well. The Indonesian Government formally approved the
project in October and all major contracts have now been awarded.
Premier is targeting first gas in 2019 to backfill our existing
Singapore and domestic market contracts. On 10 November 2017
Petrovietnam, Premier and SKK Migas (on behalf of the Indonesian
Government) entered into a Memorandum of Understanding for future
gas sales from the Tuna Field in Indonesia into Vietnam. This
represents a significant step forward in the potential development
of the field envisaging using a new cross-border pipeline to
connect the Tuna area to the existing Nam Con Son Pipeline system
in Vietnam. Further appraisal in the area is planned for 2019.
Exploration and appraisal
Premier is working with its joint venture partners Talos Energy
(Operator) and Sierra Oil & Gas to progress the appraisal and
development of the world class oil discovery at the Zama-1 well in
Block 7 Sureste Basin offshore Mexico. The Zama discovery extends
into a neighbouring block operated by PEMEX. Discussions have
commenced and are progressing well, to agree a pre-unitisation
agreement with PEMEX to enable an appraisal programme to commence
in late 2018 or early in 2019.
In the UK, operations on the Ravenspurn North Deep well (Premier
carried 5 per cent interest), which is testing the potential of a
deep Carboniferous age horizon underlying the Ravenspurn North
field are ongoing and the well remains on tight hole status.
Portfolio management
As previously announced, Premier entered into a sale and
purchase agreement to sell its interests in Licences PL089 and
P534, which contain the Wytch Farm field, to Verus Petroleum (SNS)
Limited ("Verus") for $200 million cash consideration. The
transaction was subject to the pre-emption rights of existing joint
venture partners and Premier subsequently received notification
from Perenco UK Limited ("Perenco") of its intention to exercise
those rights. It is therefore expected Premier will shortly enter
into a sale and purchase agreement with Perenco on materially the
same terms and conditions as were previously agreed with Verus,
including unchanged cash consideration of $200 million. The
disposal will be conditional, amongst other things, on shareholder
approval and a circular will be issued to shareholders convening a
general meeting as soon as possible. Subject to fulfilling the
conditions, completion is expected by the end of December 2017.
In April, Premier announced the sale of its Pakistan business to
Al-Haj Group for $65.6 million. To date, Al-Haj has paid
non-refundable deposits in accordance with the agreement of $25
million. In addition to the clearance received from the Competition
Commission of Pakistan, engagement with the Pakistani authorities
with respect to other approvals is progressing well and completion
of the transaction is expected by year end. In the meantime Premier
continues to collect the cashflows generated from the Pakistan
assets.
Discussions are ongoing with a number of parties regarding
potential non-core asset disposals principally from the E.ON
portfolio acquired in 2016.
Finance
Premier anticipates 2017 full year operating expenses of
c$16/boe in line with previous guidance. The increase from 1H 2017
reflects the expected lower production in the second half of the
year as a result of the scheduled Q3 maintenance period. Gross
G&A costs are forecast at $150 million for 2017 below the
budget for the year.
Premier's development, exploration and abandonment expenditure
for 2017 is now expected to be between $300 - 310 million, down
from previous guidance of $325 million.
Despite the forward curve being in backwardation, Premier has
taken advantage of the improvement in the commodity prices to
increase its hedge position into 2018 through a combination of
fixed price and option sales.
At 31 October, the Company's hedge position was as follows:
Q4 2017 H1 2018 H2 2018
------------------ ---------------------- --------------------- ---------------------
Oil hedges % hedged Price % Price % Price
($/bbl) hedged ($/bbl) hedged ($/bbl)
------------------ --------- ----------- -------- ----------- -------- -----------
Fixed price
oil hedges 19% 52.4 30% 53.5 16% 55.7
------------------ --------- ----------- -------- ----------- -------- -----------
Options (average
floor price) 22% 51.1 20% 54.7 - -
------------------ --------- ----------- -------- ----------- -------- -----------
UK gas hedges % hedged Price % Price % Price
(p/therm) hedged (p/therm) Hedged (p/therm)
------------------ --------- ----------- -------- ----------- -------- -----------
Fixed price 40% 49.2 34% 48.4 13% 43.2
------------------ --------- ----------- -------- ----------- -------- -----------
Net debt at 30 September was $2.8 billion, reflecting previously
guided one off adjustments incurred in connection with the
refinancing becoming effective, translation differences on
non-dollar denominated debt and lower Q3 production. With the
increase in production in Q4 and higher oil prices, Premier expects
to generate positive free cash flow in Q4 despite ongoing capex at
Catcher and to be cash flow positive for the full year including
planned disposals. As at 30 September, Premier retains significant
cash and undrawn facilities. As capex commitments (including the
completion of the development phase of the Catcher field) reduce,
debt reduction will accelerate through 2018.
Future announcements
The next Premier Trading and Operations Update will be provided
on 11 January 2018. Premier's Full Year Results for 2017 will be
announced on 8 March 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTLLFFALDLELID
(END) Dow Jones Newswires
November 16, 2017 02:00 ET (07:00 GMT)
Harbour Energy (LSE:HBR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Harbour Energy (LSE:HBR)
Historical Stock Chart
From Apr 2023 to Apr 2024