(Reuters) - North Sea focused Premier Oil expects to slash its $2.8 billion (2.2 billion pounds) debt pile significantly in 2018 by exceeding its 2017 production target and lowering spending, it said on Monday.
The oil and natural gas producer’s shares rose 3.4 percent by 0925 GMT after it also formally kicked off a debt refinancing deal and set a date for a shareholders meeting for its approval. It did not say by how much it would reduce the debt, which it has struggled to contain.
“A positive statement from Premier demonstrating good momentum in the business now that the refinancing looks out of the way,” BMO Capital Markets analyst David Round said.
Premier maintained its production guidance of 75,000 barrels of oil equivalent per day (boepd) for 2017. However, it expects to beat its target due to a near tripling of production in the North Sea ahead of the start-up of its Catcher field in December.
“We will look again at guidance either for our July trading update or August interim results but our internal projections are certainly to beat guidance for the full year,” Chief Executive Officer Tony Durrant told Reuters.
The company reported a 44 percent rise in its production to 82,600 boepd for the four months ended April 30.
Premier lowered its 2017 capital expenditure forecast to $350 million from $390 million.
It plans to generate profits this year at oil prices of $50 a barrel and is slightly ahead of the target thanks to higher oil prices and production, asset sales and lower spending, Durrant said.
A stronger British pound however offset many of those gains, leading to net debt to remain little changed.
Reporting by Sanjeeban Sarkar in Bengaluru and Ron Bousso in London; Editing by Amrutha Gayathri and Susan Thomas