Premier will keep paying off debt

Premier Oil can keep making money and paying off debt in 2020 with crude prices at recent levels, its chief executive said yesterday.

Tony Durrant said the company’s breakeven oil price was “in the low $30s” – and global benchmark Brent crude has been trading higher than $40 per barrel.

Mr Durrant said Premier had cut net debt to £1.56 billion, from £1.58bn at the end of last year, identified operating and capital expenditure savings of around £190 million and expected to be “free cash flow positive” for the full year.

Premier, which recently renegotiated a deal to buy BP’s stakes in the Andrew and Shearwater fields in the North Sea, is also involved in talks aimed at securing a long-term extension to credit lines.

“With the oil price in the $40-plus area, we will

“We will generate additional free cash flow”

generate additional free cash flow and net debt reductions in the second half,” Mr Durrant said, adding operations were “largely uninterrupted” by Covid-19.

The firm is sticking to full-year production guidance of 65,00070,000 barrels of oil equivalent (boe) per day, despite a three-week outage on its Catcher asset. A new well on the Solan field, west of Shetland, is expected to add 10,000boe per day by the end of September.

Premier warned it would have to “derecognise” some of its UK tax losses and allowances, in response to lower longterm commodity price assumptions, resulting in a “non-cash charge” of £235-400m in the first half. Revenue for the period is expected to total £420m, down 40% year-on-year.