Premier Oil has slashed its operating costs more than expected, whilst beating production forecasts, causing its share price to almost quadruple.
The North Sea explorer announced it has cut operating costs by 10-20% below the level it had budgeted for while maintaining production levels above forecast in the first four months of the year.
“We now expect production for the year to be better than we originally anticipated”, said Chief Executive Tony Durrant.
Premier Oil Production Quadruples Share Value
“Further improvements in operating efficiency” and a “robust production performance” have allowed the company to pump a total of 57,300 barrels of oil per day (bpd) during the first quarter of the year.
Premier Oil now expects production to come in at the upper end of its expected levels for the year – 65,000-70,000 bpd for the full year.
Durrant attributes the positive forecast to “strong production from existing assets, together with the contribution from the E.ON assets and the Solan field”.
“Along with continued cost savings, this positions us well to maximise our current cash flow as we remain focused on managing our balance sheet in the current oil price environment”, he explained.
Activity at the Catcher oil field remains on track. The company expects gross capital expenditure on the field to reach US$1.35 billion (£934.4 billion), a 15% decrease compared to budgeted levels. First oil is expected in the second half of 2017.
Share Prices 80% Below 2014 Levels
Meanwhile, the company’s shares went up by almost fourfold since January, when they had fallen to their lowest level in thirty years. However, the shares are still 80% below their position two years ago.
Q1-2106 was marked by Premier Oil’s acquisition of E.ON’s UK North Sea assets in the end of April as well as a production start at the Solan field, on 12 April.Last updated on 04:44PM - 12/05/16