Premier Oil refinancing talks in final stages, on track for FY output guidance

Premier Oil said it is in the final stages of negotiations with its banks and private bondholders on its refinancing and it is on track to meet full-year production guidance.

The oil producer said its lenders provided a revised term sheet last Friday, which will preserve the full amount of the existing facilities including undrawn amounts and amend the group’s financial covenants to provide sufficient headroom until after the North Sea Catcher field comes on stream next year.

The term sheet would also give lenders “certain governance controls including in respect of the sanctioning of new development projects”.

The company said on Thursday that production in the period from 1 January to the end of October averaged 69,000 barrels of oil equivalent per day and it is on track to meet previously-increased full-year guidance of 68,000 to 73,000 barrels of oil equivalent per day.

In addition, the Catcher field is on schedule for first oil next year, with total capex now estimated at $1.7bn, 24% lower than at sanction.

The group forecast 2016 operating costs of $15.9 a barrel and gross general and administrative costs of $196m, both of which are significantly below budget.

Forecast 2016 exploration and development capex is expected to be below previous guidance of $730m, with 2017 capex anticipated to be materially lower at $300m.

Chief executive Tony Durrant said: “Against a challenging commodity price backdrop, Premier continues to deliver operationally. The company is benefitting from a step change in production with a significantly lower cost base while excellent progress has been made on the Catcher project, which remains on track for first oil next year.

“Refinancing of the group's debt has taken longer than anticipated but will, once completed, put Premier in good stead to reinvest in the business while, at the same, time paying down debt. In the medium term, Premier sees increasing value in the Tolmount area, the Sea Lion projects and its exploration acreage in Mexico."

At 1122 GMT, the shares were up 0.7% to 54.90p.