Premier Oil plans to deliver “further actions” in an effort to lower its cost base next year, following a 25 percent cut in operating and G&A spend in 2015.
The company will reduce its capital expenditure to approximately $700 million in 2016, from $1.07 billion in 2015, and this figure is expected to fall even further in 2017 to around $300 million. Premier Oil’s exploration activities in 2016 will be reduced, according to a company statement, “whilst retaining in Brazil, Mexico and the Falklands the potential for material value creation in future years”.
In 2015, Premier posted a group operating loss of $707.8 million, compared to a loss of $225.7 million in 2014, and saw its revenue drop to $1.12 billion, from $1.66 billion in 2014. The group’s production averaged 57,600 barrels of oil equivalent per day, which marked a slight decrease from the average production of 63,600 boepd registered in the prior year. Premier has stated that its production guidance in 2016 will ramp up to 65-70,000 boepd and revealed that first oil from the Solan project will commence “shortly”.
Premier’s Chief Executive, Tony Durrant, commented in a company statement:
“Despite the significant reduction in oil and gas prices, reflected in our results today, 2015 was a year in which we exceeded production guidance, added to reserves, achieved notable exploration success and reached agreement on a value-adding acquisition. We also reduced operating costs by over 25 percent, significantly cut back on current and future development spend and disposed of negative cash flow assets.
“Our forward plan includes further actions to reduce debt, positioning ourselves for a prolonged period of lower oil prices, whilst continuing to take actions to build longer-term value for a recovering commodity environment.”
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