(Reuters) - Britain’s Premier Oil (PMO.L) reported a 23.5% jump in first-half profit on Thursday powered by record output and said it planned to sell its stake in the offshore Zama field in Mexico to reduce debt.
Shares in the London-listed oil company, which has struggled with its debt pile in recent years, were up 5% as of 0909 GMT following the news.
The company reported a 10.4% rose in oil and gas output to 84,100 barrels of oil equivalent per day (boepd) in the first half of the year.
The increase was largely due to its flagship Catcher field in the British North Sea which reached a plateau production rate of 70,000 boepd.
Premier plans to expand the Catcher field and will upgrade its hydrocarbon reserves estimates at the end of the year, CEO Tony Durrant told Reuters
“We’re certainly working off higher reserves numbers. We will generate another reserve upgrade at year end, we already upgraded last year,” Durrant said in a telephone interview.
Premier said it launched the sale process for its 25% stake in the Zama field in Mexico after raising its resource estimate in June.
Jefferies analysts valued Premier’s stake in Zama at $439 million (£362 million).
“Any proceeds will add to debt reduction, that still remains the corporate priority,” Durrant said. Premier’s net debt was $2.15 billion at the end of June.
The company holds other acreage in Mexico, including Block 30, southwest of Zama, where it plans to drill next year.
Premier is also looking to sell part of its 60% stake in the Sea Lion exploration blocks off the Falkland islands, it said.
“Premier Oil continues to make good progress,” said David Barclay, senior investment manager at Brewin Dolphin.
“The company appears to be heading in the right direction and long-suffering shareholders will hope for a positive reaction in the shares on the back of today’s results.”LASKA
Premier also said it had acquired acreage in Alaska, following a similar move in Indonesia several weeks ago as it seeks new exploration opportunities.
“We are building potentially very valuable acreage for the future while not taking our eyes off the debt reduction goal,” Durrant said. Profit after tax for the half year to June 30 rose to $121 million from $98 million a year earlier, Premier Oil said.
The FTSE 250-listed company reaffirmed its production target of 75,000 to 80,000 boepd after having raised the range in May.
Additional reporting by Shanima A and Muvija M in Bengaluru; editing by Arun Koyyur and Jason Neely