Premier Oil posts record production levels in first half

UK based oil and gas firm Premier Oil had a solid performance in the first half of 2016 leading it to raise its production forecast by 7% for the whole year.

Premier announced on Thursday it had produced a record 821,000 barrel of oil equivalents per day (boepd), a 34.5% increase on what it had reported at the same time last year.

It also managed to improve margins over the six months leading to 30 June, taking its operating costs down from $16.5 per barrel of oil equivalent (boe) to $14.7, an 11% improvement year-on-year and well within its $325m guidance for the full year.

The group underwent refinancing in the half leading to a minor reduction in debt at the time of the report, down from $2.76bn to $2.73bn.

Cash and equivalents saw a rise too, $307.5m this year, an 18.3% increase on the $255.9m it had on hand at the midway point of 2016.

EBITDAX (earnings before interest, tax, depreciation, amortisation, impairment, exploration expenditure and reduction in decommissioning estimates) increased from $162.7m to $325.9m.

Premier expected production would continue to rise throughout the rest of the year, the increased revenue collected from higher production volumes and the improved operating cost base would be used to further reduce the group's debt position.

Continued progress at its Catcher development in the UK North Sea would be the firms primary initiative for most of the second half, first oil is expected by the end of 2017.

Tony Durrant, chief executive of Premier, said: "Premier continues to deliver excellent operational performance, which will drive free cash flow and the reduction of net debt. The first half saw good progress on the Catcher and Tolmount projects, a world class exploration success in Mexico and the acceleration of cash flow from disposals. Following the successful completion of our refinancing, we are ahead of plans to restore financial strength while progressing a number of exciting projects for future growth."

The business has interests all over the globe including the UK, Indonesia, Vietnam, the Falkland Islands and Pakistan.

As of 0845 BST, shares had seen 1.32% boost to 57.50p.