Premier Oil boosts full-year 2016 production guidance

Premier Oil increased its full-year production guidance, adding that it had reduced its cost base over the first half of the year which was expected to lead to higher free cash flow generation.

The oil and gas explorer now expected full-year 2016 production to reach between 68,000 and 73,000 barrels of oil equivalent per day.

Progress had also been made in ammending its financial covenants and on revising the maturity profile of its debt.

"Delivery of a step change in production levels and a leaner operating cost base has addressed the lower commodity price environment. Full year production guidance is now increased, which will drive free cash flow generation. We have made substantial progress with our lending group on the principal terms of a refinancing. Our project portfolio has been expanded, positioning Premier for future growth at lower cost," Premier boss Tony Durrant said in a statement.

FTSE 250-listed Premier also emphasised that it was moving out of a period of "sunbstantial investment" and towards one of positive cash flows.

At $16.5/boe operating costs in the front half of the year had come in 14% below target, as production averaged 61,000boepd, a 600boepd increase from the year-ago period.

Recently, it had achieved record production rates above 95,000boepd, the company said.

Net profits improved to $167.1m after a loss of $375.2m in the comparable period of 2015, including a negative goodwill credit of $106.9m.

Net debt on the other hand increased versus end-2015 levels from $2.2bn to $2.63bn, but was down from where it stood at the end of the company´s first quarter.

The Catcher field in the North Sea was on schedule to deliver first oil in 2017, with capital outlays 20% less than at sanction.

As of 08:58 BSt shares in Premier Oil were 1.96% higher at 78.0p.