Premier Expects Positive Cash Flow in 2020

UK North Sea producer Premier Oil expects to be free cash flow positive this year, it said on July 15, having hedged more than a fifth of its output in the second half to a price of $56/barrel of oil equivalent (boe). Brent is trading at $42.5-43.5/b. Premier expects its first-half revenues to come in at $530mn.

"As a result of recent improvement in commodity prices together with the action taken by Premier during the first half of the year to reduce its 2020 expenditure, the group now expects to be free cash flow positive (after interest) for full year 2020 based on the current forward curve," the company said.

Premier is preparing to seal a deal to buy a group of UK North Sea assets from BP, after negotiating a much lower purchase price, but it has dropped plans to take an extra 25% stake in the Tolmount gas field from South Korea's Dana Petroleum. The company was saddled with $1.97bn in net debt at the end of June, which is around the same amount as six months earlier. It is in talks with creditors to extend debt maturities.

Premier expects to produce 65,000-70,000 boe/d of oil and gas this year, excluding contributions from the BP, which are expected to amount to 17,000 boe/d. It aims to close the deal by the end of September.

The launch in September of Premier's Solan field west of the Shetlands will add 10,000 boe/d of production, while the start-up of Premier's 50%-owned Tolmount project in the second quarter of 2021 will bolster output by a further 25,000 boe/d.