North Sea Independents Report Solid Progress

Two North Sea-focused oil and gas companies, Premier Oil and Ithaca Energy, both issued updates Thursday that indicated they were making solid progress.

Premier in an interim management statement that year-to-date production had averaged 64,000 barrels of oil equivalent per day (boepd) – which was up 12.6-percent on the corresponding period in 2013. Ithaca, reporting its third-quarter results, said that it delivered a "solid" performance in spite the quarter being its main planned-maintenance shutdown period of the year.

Premier said that it was making good progress with its development projects, with construction of the Catcher field FPSO (floating production, storage and offloading vessel) to begin shortly. Meanwhile, 2015 will see Premier involved in the drilling of a number of "material" exploration wells – including Myrhauk, offshore Norway.

However, Premier added that following a project review its Sea Lion field, offshore the Falkland Islands in the South Atlantic, will now progress as a smaller development with an estimated capital spending budget of $2 billion.

Premier also said that it has retain a strong funding position – with cash and undrawn facilities of $2.2 billion – with its cash flows protected by forward hedges against a declining oil price; approximately 43 percent of liquids produced by the company have already been sold at an average of $101.5 per barrel for 15 months until the end of 2015.

Premier Chief Executive Tony Durrant commented in a company statement:

"Despite external market volatility, 2014 has seen strong operational performance from Premier as we continue to deliver on the key targets communicated to investors earlier in the year. Looking forward, new projects will be sanctioned if they are robust at our long-term oil price which is currently $85 per barrel. This includes a phased, lower capex solution for Sea Lion.  In 2015, net cash flows will benefit from lower development capital expenditure and a programme of cost reductions."


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