Premier Oil says 2020 forecast as broadly cash flow neutral, production downgraded


Premier Oil says 2020 forecast as broadly cash flow neutral, production downgraded

Premier Oil PLC (LON:PMO) told investors that it is forecasting 2020 will be “broadly free cash flow neutral”.

Production averaged 70,100 barrels oil equivalent per day at the end of April and guidance has been downgraded to a range of 65,000 to 70,000 boepd.

It comes following the unplanned outage of the Catcher field (which is now back up) and the cessation of production from the Huntington field.

READ: Edinburgh court approves Premier’s North Sea acquisition

“We are proactively managing the business in these challenging times and remain focused on the welfare, health and safety of our people,” said Tony Durrant, chief executive.

“We continued to generate free cash flow during the period and, based on the current forward curve, expect to be broadly free cash flow neutral for the full year, benefitting from our hedging programme and action taken to reduce our expenditure.”

Meanwhile, the Tolmount field development project has seen its timeline slip with ‘first gas’ now expected in the second quarter of 2021.

Other operated growth projects are on hold with ‘optionality preserved’, the company said.

Premier noted that the Sea Lion project has been suspended, though farm-out documentation was agreed, and the Tuna project appraisal is fully-funded.

The company added that its highly prospective exploration acreage has been retained, though drilling commitments have been deferred.

The process to sell the Zama discovery is ongoing and the Mexican regulator is expected to instruct the unitisation process in the coming weeks.

In Wednesday morning’s dealing, Premier Oil shares fell 3.7% to change hands at 26p.

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