Premier’s cash flow surge means dividend payouts

By PETER RANSCOMBE
Published on 19/05/2012 00:00

PREMIER Oil chairman Mike Welton yesterday pledged to start paying dividends after telling shareholders at its annual general meeting (AGM) that the explorer is in “its strongest ever position in its history, both financially and operationally”.

The promise of returning cash to shareholders wasn’t enough to stop 9.3 per cent of votes at its AGM being cast against the directors’ pay report, according to investor group ShareSoc.

Welton said that the company – which has operations in the North Sea, the Middle East and South-East Asia – would “significantly increase” the cash flow from its production and development activities over the next three years.

Premier Oil revealed on Thursday that production is expected to grow from 60,000-65,000 barrels of oil equivalent per day (BOEPD) at present to 75,000 BOEPD by the end of the year before rising to 100,000 BOEPD in the “medium term”. Welton said: “This level of production, particularly with relatively high oil prices, means that we can see growing and predictable cash flows.

“That in turn allows us to consider some element of return to shareholders through a regular, annual dividend payment.”

The firm intends to start paying dividends at the end of the 2012 financial year, with a final decision being made by its board during March 2013.

Joining the divi-paying list is expected to make Premier Oil more attractive to investors who are looking for income.

Commenting on Thursday’s output figures, RBC Capital Markets analyst Nathan Piper said: “Production rates in the UK, Indonesia and Pakistan are all up year-on-year, with the Chim Sáo field in Vietnam adding further diversity to the production base.

“Projects critical to management’s medium-term 100,000 BOEPD target continue to make good progress.”