May 16, 2018 / 6:42 AM / 10 months ago

Premier Oil says debt reduction on track as output grows

LONDON (Reuters) - Premier Oil (PMO.L) said on Wednesday it is heading for a “material” reduction of its $2.7 billion debt pile, with its Catcher field ramp-up reaching a promised 60,000 barrels per day as oil prices LCOc1 trade at their highest in more than three years.

In a trading update, Premier reiterated it was on track to meet its full-year production guidance of 80,000-85,000 barrels of oil equivalent per day.

“We are on track to deliver our plan of material debt reduction in 2018 and 2019 with selective investment in our future growth projects from 2020, once balance sheet strength has been restored,” Chief Executive Tony Durrant said.

He has said it would be reasonable to expect net debt to fall to about $2.3 billion by the end of the year.

Premier shares were up 2.3 percent in early trade.

Premier hedges parts of it output to guard against falls in oil prices. It has expanded its hedging for next year to benefit from current high oil prices.

It said it had hedged 21-28 percent of its output through the third quarter of next year at an average price of $66-$67 a barrel. For this year, it insured 40 percent of its oil output at $58-$60 a barrel.

After disposing of assets in the North Sea in recent months, a final investment decision for its Tolmount gas field in the southern North Sea is due in the second half of the year, it said.

Premier is also working to start its first appraisal well in the Zama field off Mexico with potential reserves of up to 800 million barrels in the fourth quarter, while Mexican firm Pemex is in the process of securing a rig for a well in an adjacent block.

Reporting by Shadia Nasralla; editing by Jason Neely

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