Premier Oil says FY production could surpass guidance

The company said it was producing 61,000 barrels of oil equivalent per day, with recent record rates above 80 kboepd.

In addition, it said the Solan field, which is currently at 11,000 barrels per day, is ramping up to 14 kbopd.

Premier also said it has successfully completed the integration of E.ON UK assets and the portfolio is performing strongly.

The group said operating expenditure in the first half was around $16 per barrel of oil equivalent, which is 14% below budget. Premier said it has taken advantage of the recent weakness in the sterling dollar exchange rate following the UK’s vote to leave the European Union to lock in £110m of forward expenditure in the second half of the year at an average rate of 1.31.

“Premier expects reductions in its operating costs and capital expenditure if the current sterling dollar exchange rate weakness persists with over half of the company's remaining 2016 capex and opex denominated in sterling,” it said.

Chief executive Tony Durrant said: "Over the period, we have delivered a robust production performance, achieved first oil from Solan, completed the E.ON acquisition and reached key milestones on the Catcher project.

“We have continued to secure cost reductions across the business and are set to benefit from recent foreign exchange movements. We now look forward to a rising production profile and, with Solan on-stream, significantly lower committed capital expenditure. At current oil prices, we start to generate free cash flow later this year which positions us well to manage the balance sheet whilst retaining some optionality for future growth projects."

At 0803 BST, shares were up 2.4% to 70.38p.