Premier provides an operational and trading update ahead of its 2006 Final Results, which will be announced on Thursday 22 March 2007.
Highlights
Corporate Activity
• Acquisition of a further 25% net share in North Sumatra Block A PSC, onshore Indonesia for $36 million;
• Exercise of the right to pre-empt Hess's sale of its interest in part of the UK Scott field for $60 million at less than $5 per barrel;
• New licences acquired in Indonesia and Vietnam. Awaiting announcement of results of licensing rounds in UK and Norway;
• In Norway, Premier Oil has pre-qualified as an operator on the Norwegian Continental Shelf.
Exploration Update
• 2006 success with Dua and Blackbird in Vietnam and three discoveries in Indonesia;
• Programme of up to 17 wells planned for 2007 of which 7 are 'high impact", heavily weighted towards 1H 2007.
• Current drilling activity:
- Masimpur-3 (India) spudded 21st January;
- Ibu Lembu (Indonesia) expected to spud imminently;
- Espinafre (Guinea Bissau) expected to spud at the end of January. Eirozes to be spudded following the completion of Espinafre;
- Peveril (UK) expected spud date 17th February.
• Consistent with our policy of capital discipline in exploration the following farm-out transactions, on attractive terms, are announced:
- A third party will earn an 8% interest in Premier's assets in Guinea Bissau by contributing on a two for one basis to the forthcoming exploration programme;
- Farm out of half of Premier’s 42.5% interest in the SC-43 licence in the Ragay Gulf area of the Philippines in return for a full carry on the forthcoming well.
- Planning focus for 2008 includes a high impact multi-well campaign in Vietnam (Blocks 12E/W & 7&8/97) and drilling in Congo (Block Marine IX).
Development Assets
• Major development projects progressing as planned to build Premier’s production beyond 50,000 boepd in the medium-term. Major projects expected onstream by end-2010 include Froy (Norway), Dua & Blackbird (Vietnam), Ratna (India), North Sumatra Block A and Natuna Block A (Indonesia).
• Following successful completion of the Blackbird well and sidetrack, pre-development planning phase has commenced.
• Development approval obtained for Bhit Phase-2 including additional gas sales and the development of the Badhra gas field in Pakistan;
Current Trading Performance
• Year end production rates 4% higher than the same period in 2005 at 34.4 kboepd (four week average);
• Strong oil and gas prices realised in second half;
• Maintained balance sheet strength with net cash of around $30 million.
Simon Lockett, Chief Executive, commented:
"2006 was an excellent year for Premier with good progress on our portfolio of development projects and highly successful exploration programmes in Indonesia and Vietnam. We enter 2007 with another phase of high impact exploration activity and an intense phase of development planning on existing projects. In total, acquisitions in the last twelve months have added reserves of around 60 million barrels of oil equivalent at a cost of less than $2 per barrel"