PMO.L Regulatory News (PMO)

PREMIER OIL plc

("Premier" or "the Company")

Trading and Operations Update

13 May 2015

Premier today provides the following trading update for the period 1 January to 30 April 2015. This update is issued in advance of the Company's Annual General Meeting which is being held today at the Institute of Directors at 11.00am.

Highlights

· Production averaged 60.2 kboepd to 30 April; full year guidance maintained at 55 kboepd excluding new production from Solan

· Improved progress was made on the completion and commissioning of the Solan project with first oil targeted for later this year

· First oil from Catcher remains on schedule for 2017; progressing Sea Lion and Vette for 2016 sanction decision

· Oil and gas discovery at Zebedee, Falkland Islands; Isobel Deep, Falkland Islands, and Anoa Deep appraisal, Indonesia, drilling

· Delivering significant cost reductions for 2015 via sustainable savings in operating costs and reduced G&A spend

· Significant liquidity with cash and undrawn facilities of $1.3 billion 

Tony Durrant, Chief Executive, commented:

"We have achieved a strong start to the year notwithstanding oil price volatility. Year to date we have delivered a robust production performance, progressed our development projects, achieved exploration success in the Falklands and actively managed our cost base. Our focus remains on delivering our committed projects and managing our balance sheet while maintaining optionality in the portfolio for future growth as the oil price recovers."

Enquiries

Premier Oil plc Tel: 020 7730 1111

Tony Durrant

Richard Rose

Bell Pottinger Tel: 0203 772 2570

Gavin Davis

Henry Lerwill

Production operations

Production for the period averaged 60.2 kboepd (2013: 65.8 kboepd). This is lower than the prior corresponding period due to the sale of the Scott area in the UK and some natural decline across the portfolio. Full year production guidance is reiterated at 55 kboepd (excluding new production from Solan), recognising planned maintenance during the summer period. 

Outperformance was achieved from the Premier-operated Chim Sáo field in Vietnam, driven by continued high uptime. This was offset by restricted production from the non-operated Huntington field in the first quarter due to constraints on the gas export route. Full production from Huntington resumed on 15 April and the field is now producing at around 25 kboepd. The rest of the group's production assets performed in line with expectations over the period.

Development projects

Commissioning and hook up of the Premier-operated Solan facilities offshore West of Shetlands continued during the period. Hook up of the first pair of wells was completed in March and good productivity has been achieved using the Victory flotel in recent weeks with the improved weather. Meanwhile, drilling of the second pair of wells is due to commence mid-May. First oil from the field continues to be targeted for later this year with expected plateau production of 20-25 kbopd (gross). Cash spend to 30 April on the Solan project stood at $1.5 billion.

At the Premier-operated Catcher project, development drilling is expected to start in July and the project remains on schedule for first oil in 2017. Premier is engaging with the supply chain on its operated Vette and Sea Lion projects in Norway and the Falkland Islands respectively with a view to capturing lower cost solutions for project development. We continue to plan 2016 sanction decisions on each project.

Exploration and appraisal

The first quarter of the year saw a strong start to our four well Falkland Islands campaign with an oil and gas discovery at Zebedee, which will add resource to subsequent phases of the Sea Lion development. The Isobel Deep well, the second well of the campaign, spudded in early April and the results of that well are expected by the end of May.

In Indonesia, the Anoa Deep appraisal well spudded on 21 April. The well is designed to test the extension of the Lama reservoir to the west of the Anoa Deep discovery made in 2012. The results of the well are expected later this quarter. The potential play opening Myrhauk well on the Mandal High in Norway is still scheduled to be drilled in the third quarter.

* Volumes quoted are unrisked prospective resources

** Volumes quoted relate to the Elaine/Isobel complex; Isobel Deep is a single F3 fan test (P50 56 mmbbls) designed to de-risk the much larger Elaine/Isobel complex

Finance

Premier's 2015 cash flows are protected by a hedging programme with 5.6 mmbbls of dated Brent and 120,000 mt of high sulphur fuel oil sold forward at an average price of $97.8/bbl and $532.6/mt, respectively. Premier also started to hedge a portion of its 2016 forecast production during the period with the aim of taking advantage of the rising forward curve. As at 12 May, Premier had sold forward 3.5 mmbbls of dated Brent and 72,000 mt of high sulphur fuel oil at an average price of $68.7/bbl and $400/mt, respectively.

As at 30 April, net debt was broadly flat on the year-end position at c. $2.2 billion, reflecting lower operating costs, proceeds from the completion of the Aceh sale and final adjustments received from the disposal of the Scott area. Premier remains on track to deliver significantly lower operating costs and G&A spend in 2015.

Capital expenditure (development) for the full year 2015 is now expected to be $750 million, excluding partner funding for the Solan project. This funding is currently under negotiation with our partner Chrysaor. Planned exploration expenditure for 2015 is $220 million, in line with previous guidance.

The Group retains significant cash and undrawn facilities. As at 30 April, these stood at $190 million and $1.1 billion respectively. During the period, Premier bought back $192 million of its US private placement notes at a discount to par and repaid a $300 million term loan maturing in the first quarter of 2015.