PMO.L Regulatory News (PMO)

PREMIER OIL PLC

("Premier")

Trading and Operations Update

17 January 2013

Premier today provides a trading and operations update ahead of its 2012 Preliminary Results which will be announced on Thursday 21 March 2013.

Simon Lockett, Chief Executive, commented:

"2013 will be a busy year for Premier. After an increase of 43 per cent in 2012, a further significant increase in production is expected during 2013. We are also building an increasingly material exploration programme. We will continue the work of 2012 which saw strong reservoir performance from our producing fields and excellent progress on our operated development projects. We look forward to strongly rising cash flows allowing us to pay a dividend to shareholders and to fund new growth opportunities."

Production Operations

Estimated average production for the full year 2012 is 57.7 kboepd (2011: 40.4 kboepd) and is expected to increase to 65-70 kboepd for the full year 2013. Run rates are anticipated to increase to 75 kboepd once Huntington and Rochelle are onstream by the end of the first quarter.

Working interest production by region

*Includes Brenda, Nicol, Glamis and Stirling fields

In Vietnam, production from the Premier-operated Chim Sáo field averaged 15.2 kboepd in 2012 ahead of original development plans. The price of oil cargoes sold from the field during the year averaged in excess of $4.50/bbl over Brent.

In Indonesia, Block A sales from the Anoa field averaged 144 BBtud (2011: 152 BBtud), a share of 44.4 per cent (2011: 42 per cent) of GSA1 deliveries, against a contractual share of 36.9 per cent. Sales from Gajah Baru, which are dedicated to GSA2, averaged 72.1 BBtud while the field achieved production rates of up to 200 BBtud during the planned shutdown of the Anoa field in the summer of 2012. Overall, Premier operated facilities provided the majority (54.5 per cent) of the gas to Singapore through the WNTS pipeline.

Production from Premier's North Sea fields increased to 12.1 kboepd (2011: 10.3 kboepd) during 2012 in spite of no contribution from the Kyle field. The Banff FPSO, which handles the Kyle production, was damaged during exceptionally bad weather at the end of 2011. Since then, the Banff FPSO has been off location while repairs are undertaken. The increased production in the North Sea can be attributed to significantly higher uptime at the Balmoral facility, positive results from the Scott field well intervention programme and our increased stake in the Wytch Farm asset.

Production from Pakistan increased to 15.6 kboepd (2011: 15.1 kboepd) during 2012 as natural field decline continues to be more than offset by successful infill drilling and in-field exploration success. A programme of wells is testing tight gas zones underneath the Kadanwari field.

Development projects

On the Huntington development project, all of the five risers have now been installed with the final riser connected on 12 January. System testing has now commenced. The Operator continues to forecast first oil before the end of the first quarter with the field expected to produce 25,000 bopd (Premier estimate) after a ramp-up period.

At the non-operated Rochelle field, the subsea pipeline work is complete and the drilling rig is on location to conclude the horizontal section of the first of the two development wells ahead of final tie-ins. First gas from the field is forecast by the operator for the end of the first quarter.

Premier remains on track to deliver first oil/gas from its three operated projects in Asia (Dua in Vietnam and Pelikan/Naga in Indonesia) in 2014. The Premier-operated Solan project is progressing to schedule with development drilling expected to commence in April and first oil late 2014.

Premier's operated Catcher project continues to move forward. The development concept was formally agreed by partners in December and the project has entered the design phase. The tender processes with the FPSO providers and for the subsea facilities FEED (Front End Engineering and Design) are underway. This design phase is expected to be completed in the third quarter of 2013 and it is anticipated that the partnership will move to formal joint venture sanction thereafter.

Elsewhere, Premier is encouraged by the announced ownership change in the non-operated Bream field in Norway which will provide additional financial certainty around the funding of the development. Gas price negotiations are underway in respect of Block A Aceh in Indonesia ahead of final commitment to the project.

Following formal transfer of Operatorship, a Falkland Islands Sea Lion project team has been assembled. Detailed planning is ongoing in respect of the development drilling and production facilities design and sourcing has commenced. HSE and Environmental Management Plans are being set up to safeguard the development and operations phases. First oil from the field is targeted by the end of 2017.

Exploration and appraisal

Premier plans to drill at least 14 wells in 2013 targeting more than 200 mmboe of net unrisked prospective resource.

The Matang well on Block A Aceh is currently drilling and expected to reach the reefal build-up target during February. Elsewhere in Asia, Premier has a four well high impact programme using the Ocean General rig. This will start by drilling the high risk but potentially play opening Ca Voi well offshore East Vietnam, followed by the Silver Sillago (Ca Duc) prospect in Block 07/03 and the Kuda and Singa Laut prospects on the Tuna Block in Indonesia.

In the North Sea, forthcoming wells include Luno II on the western margin of the Utsira High in Norway, which is expected to spud in February, and Lacewing, Premier's first high pressure, high temperature well in the UK North Sea.

Prospect maturation activity is ongoing throughout the exploration portfolio with potential play opening wells targeted for 2014 drilling in Norway, Kenya and the Falklands. Subject to the interpretation of 3D seismic data which is ongoing, Premier's first exploration well in Kenya could occur as early as Q4 2013 and is included in the programme below.

Exploration New Ventures

Premier was awarded a 20 per cent non operated interest in the Skala prospective exploration licence in the Norwegian APA 2012 Licensing Round. This builds further on our acreage position in and around the Mandal High in the Norwegian North Sea.

Financial

The estimated average oil price realised for 2012 was $111.4/bbl (2011: $111.9/bbl) (pre hedge) and $107.6/bbl (2012: $89.6/bbl) (post hedge) compared with an average Brent crude price of $111.7/bbl for the year.

Estimated average gas prices (pre hedge) for our principal gas producing areas for 2012 were:

Total revenues for 2012 will be in the order of $1.4 billion (2011: $826.8 million). Pre-tax profits for full year 2012 will reflect an estimated $160 million of exploration write-offs and a positive adjustment of around $10 million in respect of the Group's commodity hedge portfolio. This is driven by the unwinding of prior provisions. For 2013, the Group has taken advantage of the relatively strong crude market conditions, forward selling approximately 17 per cent of its estimated 2013 production at an average of $105/boe.

The Group retains significant cash and undrawn facilities. As at 31 December, these are estimated at $180 million and $930 million respectively. As at 31 December, net debt is estimated to be $1.1 billion (2011: $744 million). Gearing (defined as net debt divided by net assets plus net debt) is expected to be 37 per cent. Capital spending for the full year 2012 is estimated at around $550 million (development) and $180 million (exploration, pre-tax). Planned spend for 2013 is around $900 million (development) and $200 million on exploration (pre-tax).

The Group continues to benefit from its substantial UK corporation tax loss and allowance position with an estimate of $1.9 billion of losses and allowances carried forward at 31 December 2012.

The Group anticipates announcing a dividend for the year-ended 2012 in conjunction with its Preliminary Results in March 2013.