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Premier Oil PLC PMO Interim Management Statement

  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[2] 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[2]  into the Central  North Sea  provides 
significant  potential  to  enhance  oil  recovery  from  mature  or  depleted 
reservoirs through CO[2] 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
 
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