Premier Oil Eyes Acquisitions After Record Cash Flow

Updated on

Premier Oil Plc Chief Executive Officer Tony Durrant is studying “a long list” of potential acquisitions after the U.K. explorer generated record cash flow.

“We are in a relatively healthy competitive position if we choose and when we choose to look for more growth,” Durrant said.

Operating cash flow rose 35 percent to almost $500 million in the first half from a year earlier, London-based Premier said today in a statement. Durrant forecast the explorer will bring in about $2 billion a year in cash flow within five years.

“There is a long list of opportunities we’ve got ahead of us, so obviously we’re spending a bit of time looking at those,” he said today in an interview.

Premier is focusing on bringing its Solan project in the U.K. North Sea online in 2014 after investing about $1 billion, compared with an earlier estimate of $1.4 billion. Durrant, who became the CEO on June 25, says about 60 assets are now for sale in the U.K. North Sea according to industry analysts.

“There is a thin buyer universe,” he said. “The market circumstances are in our favor. We are starting looking to the crystal ball for the next year and beyond.”

In the Atlantic, Premier plans to cut its 60 percent stake in the Sea Lion discovery off the Falkland Islands by half within six to nine months. The company and its partner Rockhopper Exploration Plc are designing the project, negotiating with potential contractors, and plan further exploration in the area before making the final investment decision around the middle of 2015. The project requires $5 billion of investment.

Expanding Disposals

Premier fell 1.4 percent to 334.7 pence in London. The shares have gained 6.7 percent this year.

It has won investors’ confidence with a “strong commitment to sell non-core assets,” Marc Anis-Hanna, a London-based analyst at VSA Capital Ltd., wrote in a report.

Premier has sold about $190 million of a planned total of $300 million of such assets, it said today. The target may grow depending on “some discussions we are having,” Durrant said.

In July, he indicated the company might sell its stake in the Chinguetti field in Mauritania.

In Norway, Premier, Tullow Oil Plc and Kuwait Foreign Exploration Petroleum Co. plan the final investment decision over the Bream project before the end of the year. They expect to recover about 40 million barrels of resources from the field.

“Part of that investment decision will be whether we stay with the project, whether we stay with the project at the current level of equity” or “rather we decide to sell,” Durrant said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE