Premier Oil gains after upgrading production guidance

The FTSE 250-traded company upped its guidance for the year to 75-80 kboepd, up from prior guidance of up to 75 kboepd, after year-to-date production came in at 85.1 kboepd, a jump of 14% compared to the same period last year.

Key to the improvement, Premier's 50% owned flagship Catcher field in the British North Sea averaged 34.4 kboepd, driving a 47% improvement in UK output to 57.4 kboepd.

Net debt presently stands at a better than expected level of around $2.25bn and the company is forecasting that it will be reduced at a pace of towards the upper end of its guidance for a reduction of between $250m to $350m over the full year, based on current oil prices.

Tony Durrant, chief executive of Premier Oil, said: "We continue to deliver ahead of plan. Production and free cash flow are ahead of forecast for 2019 and, consequently, we are reducing our debt faster than anticipated. At the same time, we are making good progress on our growth projects."

Projects include the Zama discovery in Mexico, where Premier expects gross output to eventually reach as much as 175 kboepd, and Tolmount, where first gas is expected in 2020 and production is anticipated to 58 kboepd once activity reaches its peak.

Both Zama and Tolmount were said to be running on schedule and operating expenditures in 2019 were still seen at $13 a barrel.

In a statement, Premier added that the preparation of documents needed to secure funding for its Sea Lion project off the Falkland Islands was "well advanced", going on to state that the company has hedged around 4m barrels of oil (42% of its remaining oil volumes for 2019) at about $69 a barrel for the second half of 2019 to guard against sudden oil price drops, and around 1.6m barrels or 10% of volumes at $66 a barrel for 2020.

Management had also taken out protection against lower natural gas prices, hedging a "significant" portion of its Indonesian gas volumes.

Premier Oil's shares were up 6.05% at 95.83p at 0830 BST.