LONDON--U.K. oil explorer Premier Oil PLC (PMO.LN) said Tuesday
it expects to take a write-down estimated at $300 million after tax
in the second half of the year on some assets due to lower oil
prices.
The U.K.-listed company said it has already budgeted for a cut
in operating costs of at least 10% this year versus last year and
is targeting significant further cost reductions due to weaker oil
prices.
Smaller oil companies are more exposed to falling oil prices
than integrated oil companies which can make money from other parts
of their business. The price of Brent crude has more than halved
since last summer.
Premier Chief Executive Tony Durrant said the company is in a
strong position to weather a period of oil price weakness due to
its long-term cash flow generation and a significant 2015 hedging
program, in which it has sold forward around 40% of production that
is sensitive to oil prices.
Total revenue for 2014 was $1.6 billion and capital spending for
the full year 2014 was approximately $1 billion on development and
$160 million on exploration.
The planned development spend for 2015 is anticipated to be 40%
lower, at around $600 million, and the pretax exploration budget
for 2015 is expected to be $220 million.
Write to Selina Williams at Selina.williams@wsj.com
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