Premier Oil cuts production guidance as Chrysaor merger progresses

It said the merger would create the largest London listed independent oil and gas company, with a “strong” balance sheet and “significant” international growth opportunities.

The firm said combined production to the end of October was 237,500 barrels of oil equivalent per day, and confirmed creditor support, with completion expected by the end of the first quarter of 2021.

It said its own production averaged 62,500 barrels of oil equivalent per day for the 10 months ended 31 October, although it revised its full-year production guidance down to between 61,000 and 64,000 barrels of oil equivalent per day, to take into account recent constraints at Catcher/

Solan P3 was brought on-stream in September as planned, with a production capacity of more than 10,000 barrels of oil per day from the field reported in the near term/

At Tolmount, the platform was installed and drilling of the four development wells had now started, with first gas forecast for the second quarter of 2021, adding between 20,000 and 25,000 barrels of oil equivalent per day once at plateau.

Premier Oil said it had maintained its “significant” growth optionality during the 10 months, with the unitisation and development plan negotiations progressing with Pemex at Zama in Mexico.

At Tuna in Indonesia, a farm-out agreement had been signed with Zarubezhneft, and a fully-carried two-well appraisal programme was planned for 2021.

The company reported “highly encouraging” results from new 3D data sets in both Mexico and Indonesia.

Forecast 2020 operational expenditure, excluding lease costs, were unchanged at $12 per barrel of oil equivalent, and the company’s full-year capital expenditure guidance was now $325m, reflecting full-year savings and deferrals of about $255m.

Net debt stood at $2.05bn at the end of October, with financial covenants waived through to completion of the transaction with Chrysaor.

“The merger with Chrysaor, which will create a combined group with diversity, scale and balance sheet strength, is progressing to plan,” said chief executive officer Tony Durrant.

“We now have creditor approval and we expect to publish the prospectus in December, with completion on track for the first quarter of 2021.”

At 1010 GMT, shares in Premier Oil were up 12.01% at 18.84p.