Premier Oil, the North Sea producer, has swung back to profit following a second year of record production and achieving a higher price for its oil.
The group, which has been linked to the possible purchase of US oil giant Chevron’s assets in the North Sea, on Thursday posted a pre-tax profit from continuing operations of $158.2m versus a $366.3m loss in 2017, when its financial results were affected by financing costs and impairments.
Total revenues for 2018 rose to $1.4bn from $1.1bn previously, after the company realised a higher oil price of $63.5 per barrel compared to $52.1 in 2017.
The return to profit also came after average production of 80,500 barrels of oil equivalent per day, an increase on 2017’s record 75,000 barrels per day.
The group is forecasting production of 75,000 barrels a day for 2019, which although down on 2018, would be a 5 per cent increase following disposals, the group insisted.
Premier, which is still weighed down by debts of $2.3bn, has been selling off non-core assets to help pay down loans. It succeeded in reducing debt by $393m year-on-year.
The company ran in to trouble after deciding to press ahead with a capital intensive North Sea project before oil prices took a turn for the worse in mid-2014. That project, Catcher, is now online and increased production to 66,000 barrels a day last year. Premier has also decided to develop another North Sea scheme, the Tolmount gasfield, an asset it acquired from Eon, the German utility, in 2016.
Premier was in January forced to reassure investors following a UK newspaper report suggesting that it would tap shareholders to fund a possible acquisition of Chevron’s North Sea assets. Following a fall in its shares, Premier insisted at the time that there was “no guarantee that the group will bid in any process or that any process will complete”.
In its full-year results statement on Thursday, Premier said it continues to “evaluate potential acquisition opportunities that enhance our asset base and create synergies with the existing core businesses”.
It added: “With many of the majors and larger independents looking to refocus their portfolios away from the UK North Sea, there is an opportunity for Premier to acquire mid-life, cash flow generative and profitable production assets with potentially significant upsides, which have not been pursued by the previous asset holders. Of course, any potential acquisitions have to be measured against and compete for capital with the existing organic opportunities within our portfolio.”
Mark Wilson, analyst at Jefferies, said what needs to be going right at Premier is “is going right”.
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