Premier Oil doubles profits despite output being reduced

PREMIER Oil more than doubled its profits, despite producing less oil and gas in the year’s first half, as it prepares for a flood of cash into the business.

The oil market recovery helped the producer to a post-tax profit of $98.4m (£76.6m) compared to $40.7m in the first half of last year, even as production fell to an average of 76,200 barrels a day from 82,100 barrels.

Premier has ramped up production from its Catcher oil project in the North Sea, which is expected to open the floodgates of cash flow into the business to help to reduce its debt burden.

The linchpin project is crucial for Premier, which hopes to slash between $300m and $400m of net debt from its balance sheet this year.

Tony Durrant, Premier’s chief executive, said it cut just $70m in the first six months of the year but that the coming months will bring a turnaround.

Premier’s cash flow dipped to $276.6m from $282.7m, in part because its production rates were lower but also because it hedged its production about a year in advance, when market prices were lower.

“At Catcher we were only shipping around one cargo a month, and now we’re at four,” said Mr Durrant.

“We were always going to be weighted towards the second half of the year,” he said, adding that Premier is “very much on track” to meet its debt cutting targets.

In recent weeks Premier’s average production rate climbed to more than 86,000 barrels a day.

At higher oil prices the extra barrels are likely to generate between $200m and $300m of cash for the business.

Earlier this week Premier agreed to move forward with its Tolmount project in the southern North Sea.