Premier Oil Plc (PMO)’s newly appointed Chief Executive Officer Tony Durrant has three immediate priorities to consolidate a share-price gain of more than 20 percent since he took the job this year.
He plans to bring onstream the $1.4 billion Solan field located west of Shetland before the end of the year, find a partner to share a $5 billion investment to develop the Sea Lion project off the Falklands, and exceed an oil-production target.
Durrant, who was promoted to the top job at the London-based explorer on June 25 after being chief financial officer for about nine years, also aims to double cash flow within five years to about $2 billion a year.
“We have to continue to tick the boxes on the things we’ve been doing, continue to restore credibility, keep the production up, beat the guidance,” the CEO said in his first interview since taking the job. “I’ve banned the use of the words strategy review, because it’s a distraction for the vast majority of people in the organization and does create a certain amount of speculation.”
Premier yesterday said oil and gas production rose 10 percent in the first half of the year, driven by the fields in the North Sea. The shares have risen more than 20 percent since the departure of the previous CEO Simon Lockett on Feb. 4, and Durrant wants to keep investors happy by beating output guidance of as much as 63,000 barrels of oil equivalent a day for this year.
Premier shares fell 0.4 percent to 324.5 pence in London.
Premier needs “to start to think about new investment, new opportunities,” Durrant said. “We’ve got our list of opportunities -- they are things within the core skills, they are things within core geographies. It’s not shuttering stuff.”
The explorer may reduce its stake by as much as half to 30 percent in the Sea Lion discovery, with at least 293 million barrels of recoverable oil off the Falkland Islands. It plans to conduct the “detailed engineering” project design before securing a partner in the venture, the CEO said.
“It’s a too-big project for Premier to take on its own,” Durrant said. “We don’t want to become a pure Falklands company in five years’ time.”
Rockhopper Exploration Plc (RKH), Premier’s partner in the project, today said Amec Plc was awarded a contract for the front-end engineering and design of a platform for the Sea Lion field.
Premier will also continue asset sales, including a possible disposal of its stake in the Chinguetti field in Mauritania, to reach the $300 million target. It has already sold about $200 million “of non-core” assets in Norway, Indonesia and the North Sea, Durrant said.
“Premier is in a very healthy shape,” he said. “We are incredibly well financed.”
The company dropped an extraction target of 100,000 barrels of oil equivalent a day. Nevertheless, the start of new fields such as Solan, Sea Lion and Catcher will allow the producer to reach this output rate, Durrant said.
“We stopped talking about production targets a while back, but not because we are not going to get there, but because cash flow growth is probably more important to investors,” the CEO said.
To contact the reporter on this story: Eduard Gismatullin in London at firstname.lastname@example.org