London-listed Premier Oil reported a pre-tax profit of US$110 million for January to June, compared to a loss before tax of US$214.6 million for the first half a year ago.
Advertisement
The figure compares to a $375.2m loss in 2015 when the company was forced to take a $385.3m impairment on certain oil and gas assets.
The deal includes a 5.2% stake in the Total-operated Elgin-Franklin gas-condensate field, 25% of the Huntingdon and 47% of the Babbage fields in both of which Premier will assume operatorship from E.ON, and 50% of the 0.2 trillion to 1 trillion ft³ Tolmount gas discovery now also to be Premier-operated.
“Delivery of a step change in production levels and a leaner operating cost base has addressed the lower commodity price environment”, he said.
Citing the robust production performance, Premier has revised upwards its production guidance for the full year to 68-73 kboepd from previous estimate of 65-70 kboepd.
Premier Oil, which on August 18 announced a return to profit in the first half of the year despite weak oil prices, earned the windfall from investments denominated in sterling, lower decommissioning fees also in sterling, and a higher value for its US$120 million acquisition of E.ON’s North Sea assets.
“This second half average run rate should be achievable given that Premier has had recent record production rates above 95,000 barrels of oil a day and the majority of its planned maintenance downtime for the year is behind them”, said Jefferies analyst Mark Wilson, adding that a 100,000 barrel rate was possible.
“We have made substantial progress with our lending group on the principal terms of a refinancing”, he explained. Solan on-stream.Operating cash flow of $108.7mn (2015 H1: $513.0mn). “Our project portfolio has been expanded, positioning Premier for future growth at lower cost”. The weaker sterling exchange rate positively impacts forward opex, capex and debt. Premier Oil said debt levels stood at $2.6 billion at the end of June, higher than a year ago but down from the end of the first quarter.
Premier also has production in Indonesia, Pakistan and Vietnam.
Advertisement
Liberum repeated its “buy” recommendation following this morning’s results statement and with a price target of 136p it sees some 75% upside to Premier Oil’s current price of 77.25p.
