North Sea maintenance hits Premier's volumes

13th Jan 2011 07:16

Estimated average production for Premier Oil declined in 2010 as the oil and gas producer saw increased maintenance activity in the North Sea, particularly in the second half of the year.Estimated average production for the full year 2010 was 42.8 thousand barrels of oil equivalent per day (kboepd) (2009: 44.2 kboepd).Group production for the current year is expected to be in the range of 45,000 to 50,000 barrels of oil equivalent per day.Gas production in Indonesia exceeded expectations and there was increasingly strong demand from Singapore. Gas demand in Pakistan remained strong and 2010 production was in line with expectations. The average Brent oil price for 2010 was $79.5 per barrel (/bbl), up from 2009's average of $61.7/bbl. Premier's oil production sold at an average $0.20/bbl premium to Brent. Average realised gas prices for Indonesia were $13.90 per million cubic feet (mcf), up from $11.00 in 2009, while for Pakistan the rate rose to $3.50 from $3.20 in 2009.The group is protected against low commodity prices by its programme of hedges in the form of collars. These provide an average floor for 2011 of $50/boe with a cap of around $82/boe. Volumes covered by these hedges represent around 48% of expected oil production and 23% of expected Indonesian gas production for 2011.Year-end cash resources and undrawn bank facilities (including letter of credit facilities) are estimated at $1.2bn.The net debt position at year-end is expected to be around $410m, assuming a valuation of the outstanding convertible bond of $220m."Premier made excellent progress in its development and exploration activities during 2010," said chief executive Simon Lockett."It is pleasing to start 2011 with exploration success at Varadero, which has given us even greater confidence in reaching our medium-term production target of 100,000 boepd," he added.