Premier Oil PLC (LON:PMO) boss Tony Durrant has told investors that the company aims to advance its growth projects in the North Sea, Mexico and the Falklands whilst maintaining a disciplined financial framework.
The company’s financial results statement, released today, confirmed record production at 80,500 barrels of oil per day up from 75,000 boepd in the prior year.
It highlighted that new North Sea field Catcher saw its plateau rate increase to 66,000 boepd and during 2018 the Tolmount field development was greenlighted setting up an additional 58,000 boepd of gross production – a four well development drill programme is slated to start by mid-2020, meanwhile, an appraisal of an expansion area takes place this year.
Similarly, the company is advancing the appraisal of the large Zama discovery offshore Mexico.
Premier, meanwhile, revealed that it intends to progress its financing plans for the Sea Lion field in the Falklands.
Sea Lion currently ranks as Premier’s largest fully appraised un-developed asset, and, it had previously planned to rely on new partnering to support the project financing.
Today, Premier highlighted that potential key contractors to the project have agreed to provide some US$400mln of financing and the ‘critical path’ to Sea Lion’s final investment decision is on securing a senior debt funding structure, including a combination of export credit financing and project bank funding.
It highlighted that a formal loan application for Sea Lion project funding is due to be submitted in the second quarter.
Premier repeated, meanwhile, that it is still the company’s preference to bring in a partner in order to “optimise its level of participation in the project”.
Whilst growth project evidently remain on Premier’s agenda, the financial results reveal a profitable and cash generative business capable of servicing the company’s not insignificant debt-pile – which at US$2.3bn at the end of December had reduced by US$393mln over the course of the year.
Premier reported a US$133.4mln profit, representing a notable improvement from the US$253.8mln loss in 2017.
Earnings (EBITDAX) was marked at US$882.3mln, up 50% from US$589.7mln in the preceding year.
Cash flow from operations amounted to US$777.2mln which was up 64% from the US$475.3mln generated in 2017.
Whilst debt was reduced by US$393mln, some US$181mln was the result of an accelerated conversion of convertible bonds.
Looking to the current financial year, Premier is giving production guidance of 75,000 boepd which corresponds to 5% growth after adjustment for asset disposals.
In the year to date, meanwhile, the production rate has averaged 89,000 boepd.
The company noted that cash margins are expected to be around 30% higher at comparable commodity pricing.
"2018 saw higher production, positive free cash flow and a return to profitability,” chief executive said Tony Durrant.
“The group is ahead of plans to restore balance sheet strength and remains focused on consistently delivering free cash flows.
“Growth projects such as Tolmount, Zama and Sea Lion, together with promising exploration in Mexico and Indonesia, are being advanced within a disciplined financial framework."