Premier Oil driven to cut spending by 40% due to crashing oil prices

Oil and gas explorer Premier Oil has been forced to cut spending on development to $600m and label its budget “subject to further review” due to plummeting oil prices.

The company looked to negotiate with key contractors in an effort to reduce costs as despite a 6% increase in revenue from 2013, an impairment charge estimated at $300m will be written off of 2014’s results.

Tony Durrant, chief executive, said: "Premier is in a strong position to weather a period of oil price weakness due to its long-term cash flow generation. Premier has also responded to the sharp fall in the oil price with a broad programme of cost reductions and the postponement of discretionary spend."

The company forecast the production of 55,000 barrels in 2015, down from 63,600 the year before.

The European benchmark, Brent crude, was trading just above $45 a barrel on Wednesday, the lowest price for six years.