Premier Oil Falls After Cutting Production Forecast
Premier slid 3.4 percent, the biggest decline since May 15, to 328.5 pence after reducing this year’s estimate to 57,000 to 59,000 barrels of oil equivalent a day from 63,000 barrels. It was the worst performer on the Stoxx 600 Oil & Gas Index.
A disruption at the BP Plc-operated CATS pipeline, which exports gas from the North Sea Huntington field, and damage to a link from the Chim Sao deposit in Vietnam led to the revision, the London-based company said in a statement. It expects to pump 65,000 barrels a day by the end of the year.
The production constraints “are temporary in nature and largely outside the control of Premier,” Gerry Hennigan, an analyst at Goodbody Stockbrokers in Dublin, said in a note. “The pattern of successive delays and production shortcomings will continue to weigh on the share price.”
In the U.K., the Huntington oilfield, operated by EON SE and with Iona Energy Inc. (INA) and Norwegian Energy Co. as partners, is currently pumping 12,000 barrels of oil a day, Premier said. In Vietnam, gas exports were interrupted following damage to a connection between Chim Sao and the Nam Con Son pipelines.
“With Chim Sao associated gas making essentially nil earnings contribution net of tariffs we see negligible value impact from this outage,” Mark Bloomfield, an analyst at Deutsche Bank AG, wrote in an e-mailed report.
Norwegian Energy fell 32 percent in Oslo and EON dropped 1 percent in Frankfurt.
“While our oil production is currently restricted by gas export issues in both Vietnam and the U.K., this has limited impact on the long-term value of those fields,” Chief Executive Officer Simon Lockett said. “Plans are in place to address these issues.”
Premier expects to invest about $1 billion in projects this year, including $220 million in exploration, it said in the statement. “Rationalization of the existing exploration portfolio is under way with around 20 licenses, mainly in the North Sea, in the process of being farmed out or being relinquished,” it said.
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