LONDON (Reuters) - Premier Oil (PMO.L) said on Thursday it expected full-year production to come in at the low end of a previously announced 80,000 to 85,000 barrels per day range.
The company, which has been focussing on cutting debts, also said its debt pile would shrink to $2.4 billion by the year-end.
Premier’s debt reduction this year was broadly in line with its target of $300-400 million and Chief Executive Tony Durrant told Reuters he saw net debt reduction next year in that range as well.
When asked when Premier might reinstate dividends, Durrant said net debt below $2 billion would feel “comfortable” but that payouts would have to be weighed against investment in growth in Mexico, the Falkland Islands and Indonesia. The company has not paid dividends since 2014.
Premier is starting drilling later this month to appraise its resources in Mexico’s huge Zama field and expects results on the extent and depth of the reservoir as well as flow test data in around a hundred days, Durrant said.
“Premier remains our preferred Brent oil price play providing leverage to strong oil prices through debt reduction and accelerated use of UK tax losses,” RBC said in a note.
Premier has hedged around 30 percent of its output at a price of $69.1 per barrel for the first half of next year and $72 per barrel for the second half, it said.
On the production outlook BMO analysts said: “The headline is a reduction to production guidance ... as Premier is likely to be more impacted by a volatile commodity backdrop although at our long-run Brent forecast of $70/bbl, the shares look good value.”
Premier’s shares were down 1 percent by 0923 GMT. Premier Oil has a market cap of about 760 million pounds ($975.16 million).
(The story corrects to read Falkland Islands, paragraph four).
Reporting by Shadia Nasralla; Editing by Adrian Croft and Jane Merriman