Premier Oil PLC (PMO) - Interim Management Statement RNS Number : 1694R Premier Oil PLC 15 November 2012 PREMIER OIL plc ("Premier" or "the Company") Interim Management Statement 15 November 2012 Premier today provides its Interim Management Statement for the period to 15 November 2012. Outlook ·Premier anticipates sharply increasing cash flows for both 2012 and 2013 driven by rising production and strong oil prices. ·Production is expected to increase to 75 kboepd once Huntington and Rochelle are onstream and is anticipated to average 65-70 kboepd for 2013. New UK production will result in a disproportionate increase in cash flows due to Premier's UK tax position. ·Good progress has been made on all Premier-operated projects - Dua in Vietnam, Pelikan and Naga in Indonesia, and Solan and Catcher in the UK - supporting Premier's medium term objective of 100 kboepd. ·An active programme of 16 wells is planned to year-end 2013 targeting an unrisked net resource potential in excess of 200 mmboe. Recent activities ·Average production for the ten month period to 31 October 2012 was 57.3 kboepd (2011FY: 40.4 kboepd). Production averaged 62.4 kboepd for November month-to-date. ·The Huntington and Rochelle development projects in the UK are nearing completion with first oil and first gas expected during the first quarter of 2013. ·The acquisition of 60 per cent of Rockhopper Exploration's interests in the Falkland Islands has been completed and Premier has assumed operatorship of the Sea Lion project. ·The Premier-operated Cyclone well in the UK and the 250 bcf Matang prospect on Block A Aceh in Indonesia are expected to spud imminently. · Premier was awarded 12 new licences - six operated - in the recent 27^th UK Licensing Round further building on its existing acreage in the important Catcher area, the Inner Moray Firth and the West of Shetlands. · Premier is part of a consortium recently shortlisted for the next stage of the UK Carbon Capture and Storage Commercialisation competition. Simon Lockett, Chief Executive, commented: "Our producing fields are performing well and our development projects are moving forward. This will bring rising cash flows and strong financial returns. We have added material new plays to our exploration portfolio, particularly in Vietnam, the Falkland Islands and Iraq, and are looking to participate in an innovative project to access significant remaining reserves in the UK North Sea." Enquiries Premier Oil plc Tel: 020 7730 1111 Simon Lockett Tony Durrant Pelham PR Gavin Davis Tel: 02 7861 3232 Henry Lerwill Copies of Premier's announcements are available on the corporate website: www.premier-oil.com. Production operations Production averaged 57.3 kboepd for the first ten months of the year (2011 FY: 40.4 kboepd) while average production for November month-to-date is 62.4 kboepd. kboepd 1 Jan - 31 Oct 2012 2011 FY UK 12.1 10.2 Vietnam 15.1 2.9 Indonesia 14.0 11.5 Pakistan 15.5 15.1 Mauritania 0.6 0.7 Total 57.3 40.4 Run rates are expected to increase to 75 kboepd once the Huntington and Rochelle fields are onstream in early 2013. Average annual production for 2013, taking into account the planned shut-down periods next summer, is expected to be between 65-70 kboepd. Underlying reservoir performance from Premier's producing fields has been strong. In Indonesia, the Anoa field continues to deliver over its 36.9 per cent contractual share of GSA1 at around 45 per cent while Gajah Baru rates continue to increase. The Domestic Gas Swap agreement, via which Gajah Baru would sell additional gas (up to 2 kboepd), has not yet been executed. While there remains the potential for this to be executed in 2013, the additional production has not been included in Premier's 2013 forecast. In Vietnam, facility up-time in the second half of the year has improved. However, oil production is currently constrained at between 27-30 kbopd because the gas export has been restricted due to ongoing work on the compressors and power systems. Reinstatement is expected in late November. Water injection rates are now at 30 kbpd, providing effective pressure support. The UK producing fields are generally performing well. Uptime at the Balmoral facility has improved significantly although return to full production capacity on the facility following the annual maintenance shut-down was slow and has been hampered by ongoing logistical issues relating to UK helicopter services. On Kyle, the Operator is targeting the 2013 summer weather window to have the field back onstream, although Premier has not included any contribution from Kyle in its 2013 production forecast. In Pakistan, the natural decline in the fields continues to be more than offset by new wells brought on-stream at the Kadanwari and Badhra fields with further new wells at Kadanwari and Zamzama expected online by year‑end. Development projects The Voyageur Spirit has been on location at the non-operated Huntington field since 3 October 2012. Two out of the five risers have been installed. The three remaining risers to be installed each require three clear days of weather. Carry over work from the yard and commissioning is underway. The Operator is forecasting first oil before the end of the first quarter with the field expected to produce 25,000 bopd (Premier equity 40 per cent) after a ramp-up period. On the non-operated Rochelle field, the first of two development wells was drilled to final casing point. The rig was released to allow for the subsea pipeline and umbilical installation. A second rig is scheduled to return to complete the horizontal section of the well ahead of first gas from the field now forecast for the first quarter of 2013. Premier's operated projects - Solan in the UK, Dua in Vietnam and Pelikan and Naga in Indonesia - continue to make excellent progress and remain on schedule for first oil/gas in 2014. Meanwhile the partners of the Premier-operated Catcher project have agreed concept selection and FEED programmes, including a funded competitive FEED programme with a shortlist of FPSO providers, which will proceed shortly. Submission of the Field Development Plan to DECC is targeted for mid-2013. Following formal assumption of operatorship by Premier on 1 November 2012, a detailed pre-FEED work programme for the Sea Lion development in the Falkland Islands is under way. Concept validation and pre-FEED studies are expected to complete by mid-year 2013. A Declaration of Commerciality and Development Plan for the Banda gas field in Mauritania has been submitted to the Government of Mauritania for approval. Exploration and appraisal In the UK, the WilPhoenix rig is moving to drill the Premier-operated Cyclone well. The Matang well in Block A Aceh will also spud imminently. Other forthcoming wells include Lacewing, a high pressure, high temperature well, in the UK Central North Sea, which is expected to spud before year-end and the Luno II prospect in Norway, now scheduled for the first quarter of 2013. In 2013, 13 exploration wells - six near field exploration wells in the UK and Pakistan and seven high impact wells - are planned to be drilled. The high impact wells include the material Silver Sillago and Ca Voi wells in Vietnam, the Kuda and Singa Laut wells in Indonesia and, subject to prospect maturation and partner approval, Premier's first exploration well offshore Kenya. Premier's 2012/2013 Exploration & Appraisal Programme Country Well Name Estimated Licence Gross Risk timing interest resource range (%) low-most likely-high (mmboe) Indonesia Matang-1 Q4 2012 41.67 18-40-73 Moderate UK Cyclone Q4 2012 70.00 8-30-50 Moderate UK Lacewing Q4 2012 20.20 24-58-110 Moderate Norway Luno II Q1 2013 30.00 30-120-300 Moderate UK Bonneville Q1 2013 50.00 2-10-20 Low Pakistan Badhra South Q1 2013 6.00 18-38-67 High Deepening-1 Pakistan Badhra BN-2 App Q1 2013 6.00 5-8-13 Low Pakistan K-32 Q2 2013 15.79 5-7-9 Low Vietnam Ca Voi (Whale) Q2 2013 40.00 35-120-190 High Vietnam Ca Duc (Silver Q3 2013 30.00 20-45-105 High Sillago) Pakistan Badhra-6 Parh Q3 2013 6.00 11-58-70 Moderate Mauritania Tapendar Q3 2013 6.23 TBC TBC Indonesia Kuda Laut & Singa Q4 2013 65.00 52-100-148 Moderate Laut (2 wells) Pakistan K-36 Q4 2013 15.79 2-5-9 Low Kenya Exploration well Q4 2013 20.00/25.00 TBC TBC New Ventures In the UK 27^th Licensing Round, Premier was awarded a total of 12 licences (six operated), building on Premier's existing acreage position in the UK North Sea. In particular, Premier was awarded four operated licences adjacent to the Catcher area, which offer both near field and deeper exploration potential. Premier, by leveraging EnCounter's knowledge and expertise, was also able to capture several Mesozoic prospects and leads, primarily in the Inner Moray Firth. In addition, Premier secured a non-operated licence interest in the West of Shetland Basin. It is anticipated that the leads and prospects identified on this newly captured acreage will be matured during 2013, with drilling planned in 2014 and beyond. In November, Premier was formally awarded a 30 per cent non-operated interest in Iraq's Block 12. The plan is to acquire new seismic data across the block in 2013. In the Falkland Islands, Premier received notification that licences PL023 and PL024 have been extended to November 2013 pending further seismic interpretation work and that licences PL003, PL004 and PL005 will be extended to May 2016 with the addition of a one well commitment. Premier is working closely with Rockhopper to mature a minimum three well exploration programme for the area, expected to take place in 2014. Carbon Capture and Storage ("CCS") As announced by DECC on 30 October 2012, Premier, in conjunction with a number of consortium partners (together "Teesside Low Carbon"), was selected to go through to the next phase of the UK CCS commercialisation competition. The project involves the development of a syngas plant (to be operated by BOC) to convert coal to carbon dioxide and hydrogen-rich synthesis gas (syngas). The syngas will be used to generate green electricity via a new CCGT plant on the existing Teesside Power Station site (operated by GDF Suez). CO will be transported offshore by pipeline for storage in depleted fields or saline aquifers. The offshore function will be undertaken by Premier and its partner Progressive Energy. Delivery of CO into the Central North Sea provides significant potential to enhance oil recovery from mature or depleted reservoirs through CO injection. Work is continuing on the development of engineering designs and planning applications by Premier and its partners. It is expected that the consortium, if selected to progress the project in 2013, will make a final investment decision in 2014. Finance Capital expenditure for the full-year 2012 is expected to be around $1 billion, including the acquisition cost of the Rockhopper transaction ($231 million). Premier's total debt facilities (including letters of credit) at 31 October 2012 were over $2.6 billion while net debt stood at around $1.1 billion. Cash and undrawn facilities are approximately $1.1 billion. During October 2012, Premier successfully completed (with 98.3 per cent acceptances) the exchange of $245million new convertible bonds (with a reduced coupon of 2.5 per cent and a higher conversion price of $7/share) for its existing convertible bond, extending the maturity to 2018. Additional forward sales of Brent oil and High Sulphur Fuel Oil (which underpins Singapore gas prices) were made in August 2012. In total, 2.25 mmbbls of Dated Brent at an average price of $110/bbl and 132,000 MT of HSFO Sing 180 at an average price of $602/MT have been sold forward for 2013 representing some 18 per cent of expected liquids and 22 per cent of expected Indonesian gas production. Future Announcements Premier's 2012 Preliminary Results will be announced on Thursday 21 March 2013. A Trading and Operations Update is planned for Thursday 17 January 2013. This information is provided by RNS The company news service from the London Stock Exchange END IMSFFEFULFESEEF -0- Nov/15/2012 07:00 GMT
Premier Oil PLC PMO Interim Management Statement
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