North Sea operator Premier to cut spending plan but reassures on oil price hit

Premier Oil, a major North Sea operator, is to cut its spending programme by at least $100 million (£80m) this year as it looks to offset the impact of the oil price fall.

The Catcher FPSO before being floated out to the North Sea. Picture: Premier Oil

The update was one of a flurry of announcements today from North Sea companies as they sought to reassure investors.

Premier, which still proposes to press ahead with plans to acquire North Sea assets from BP and the Korea National Oil Corporation despite opposition from a key creditor, said discussions are underway to reduce its 2020 capital expenditure programme by at least $100m with the potential for further cuts.

The firm, behind the North Sea’s Catcher area, said its fields continue to perform well and reiterated full-year production guidance of 70-75,000 barrels a day.

Premier also stressed it has hedged 30 per cent of its 2020 production at an average price of $60 per barrel and said it had “significant” liquidity.

Creditor Asian Research & Capital Management has urged the company to abandon its plans to acquire further North Sea assets after warning that it faces the prospect of running out of money following the fall in oil prices.

Meanwhile, Longboat Energy, the energy firm set up by the former management team of Aberdeen’s Faroe Petroleum to build a significant North Sea business, said it is eyeing opportunities to snap up bargains on the back of the collapse in oil prices.

The firm has been looking to buy assets since it floated on Aim last year but said its strict criteria for acquisitions meant none of the opportunities had yet led to a deal.

In a stock market update it now says the current uncertainty means “financially constrained” companies may seek to dispose of assets that it will be able to consider “opportunistically”.

“In addition, it is likely that opportunities will arise out of distressed situations,” it added.

Chief executive Helge Hammer said the company’s robust balance sheet and low overheads meant it was well-placed to benefit.

In another update by a North Sea firm, Independent Oil and Gas which has ambitions to be a substantial UK gas producer, said progress on its planned projects in the region were continuing to progress well despite market volatility.

It said platform designs were at an advanced stage and construction was now underway.

Cluff Natural Resources also reassured investors that the company’s operations remain on track and day-to-day operations are unaffected by Covid-19 and the fall in oil prices.

“The company is in a position of relative strength in these uncertain times. It has no direct exposure to oil prices, has no debt and is well capitalised following a fundraising in June 2019,” it said.