Premier Oil Focuses on Exploration

Premier Oil intends to shift its focus to the exploration and then sale of promising projects, while scaling back on production and development, as part of its ongoing effort to create a position itself in the Asian oil and gas industry. The U.K.-based company said its restructuring should be complete by the end of 2002. Premier stated in the 2001 financial results that were released on March 13, 2002 that the company had not succeeded in the ambition growth plan outlined in 1999 when Malaysia's Petronas, and Amerada Hess Corp. each took 25% of the company.

Nonetheless, sales of stakes in Pakistan and Indonesia, and increased gas sales from fields in Myanmar and Indonesia lifted profit levels and reduced debt in 2001.

Premier's profits after tax and exceptional items rose to GBP20.3 million, from GBP6.1 million in 2000, the company said in its preliminary results, released Wednesday. Earnings per share rose to GBP1.28, from GBP0.39/share in 2000. No dividend was declared. Debt levels were at GBP379.3 million at year-end, down GBP66.1 million from the year before.

Production rose 50% in 2001, to an average of 40,900 barrels of oil equivalent a day. The company targets 45,000-50,000 boe/d in 2002 - a level which it will sustain over the next 10 years. Increased production was largely due to fields in Indonesia and the U.K., offset by declining production in Premier's mature U.K. fields. New fields in Asia raised natural gas production to 47% of Premier's total production, and reduced U.K. production to 45% of total production. To date in 2002, production has averaged 49,000 boe/d, Premier said, but future levels depend on gas sales volumes. Proven and probable reserves, on a working interest basis, fell to 469 million boe, a drop of 19 million boe due to divestments. Unit operating costs fell 11% to GBP3.65/boe, due to the company's focus on lower cost natural gas production. Production in Pakistan rose 83% to 5,700 boe/d, Premier said. It will bring the Bhit gas field onstream at end-2002, and plans two new wells in Pakistan's Kirthar National Park this year.

Gas production in Myanmar averaged 114 million standard cubic feet a day - or 5,600 boe/d - below contracted volumes of 200 million cf/d. Condensate production averaged 1,000 b/d. Premier - which received take-or-pay payments from partner PTT Plc in 2001 - expects GBP22.3 million in take-or-pay payments for its Myanmar and Indonesian fields in 2001. Indonesian output rose 100% to 10,200 boe/d in 2001. Premier plans at least one exploration well in its Block A in the West Natuna Sea in 2002, and also hopes to conclude a gas sales agreement with Petronas from Block A this year. Premier sold its Ujung Pangkah field in Indonesia to Amerada Hess for US$30 million.