Higher output pencilled in by Premier Oil as North Sea Catcher field shines

The Catcher FPSO before it was moved to position in the North Sea. Picture: Premier Oil
The Catcher FPSO before it was moved to position in the North Sea. Picture: Premier Oil
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Premier Oil expects full-year production to come in at the upper end of forecasts as its flagship Catcher field in the North Sea continues to deliver a strong performance.

The company said group production averaged 79,400 barrels of oil equivalent per day (boepd) during the first ten months of 2019, meaning the full-year figure is likely to come in close to 80,000 barrels.

Extended factory testing being conducted on the facility. Picture: Premier Oil

Extended factory testing being conducted on the facility. Picture: Premier Oil

The Catcher field, which lies 170 kilometres south-east of Aberdeen, has accounted for most of the output as it continues to enjoy what Premier described as “very high operating efficiency of almost 100 per cent”. Cash payback on the project has been reached 22 months after first oil.

Premier said its next UK project, Tolmount, was on schedule for first gas by the end of 2020 adding some 20-25,000 boepd to group production once plateau rates have been achieved.

Two Catcher area satellite developments, Catcher North and Laverda, were formally approved in September and first wells will be drilled in the middle of next year. Development planning for a project at Tolmount East is also well advanced.

Elsewhere, Premier flagged “significant industry interest” in the sale of its Zama block in Mexico and has extended its bid deadline into December.

Group net debt has reduced by $300 million (£234m) to $2.03 billion as at 31 October in line with its full-year reduction target.

Chief executive Tony Durrant said the update showed the firm was “continuing to deliver on our strategic priorities”.

Value

“We are generating significant free cash flow, which is materially deleveraging our balance sheet,” he said. “At the same time, we are actively managing our portfolio and selectively progressing growth projects at the right exposure. We also continue to create value through the drill bit and to build material new positions in emerging exploration plays at low cost.”

David Barclay, senior investment manager at Brewin Dolphin, said the update highlighted how the Catcher area “holds its place as the cream of the crop with strong output levels reported from this field once again”.

“Overall debt levels remain high, but the company has reported a $300m reduction, which is deemed to be in line with guidance. What’s yet to be seen is the impact of the sale of its Zama oil field, which now has an extended bid deadline to December,” he added.

Premier holds a 25 per cent non-operated interest in the Zama discovery in the Sureste Basin. The company launched the sale process earlier this year as part of steps to strengthen its balance sheet.

Analysts from Berenberg said the sale of the Zama stake could be a “key catalyst” for Premier.

READ MORE: Premier cuts costs and debt as North Sea output jumps