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Premier Oil's North Sea projects disrupted by Covid-19

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Oilfield Technology,

Premier Oil has provided an operational update for the period 1 January to 30 April 2020.

Financial highlights

  • Forecast broadly free cash flow neutral for full year 2020 at current forward curve
  • - 30% of 2020 volumes hedged at US$60/boe including c.50% of 2Q20 oil production at US$64/bbl
    - Estimated US$240 million of CAPEX and OPEX savings and deferrals secured
  • Liquidity retained with c.US$160 million of unrestricted cash and US$330 million of undrawn facilities; addressing covenants and drawing profiles with creditors
  • Court approved creditor schemes of arrangement; re-engaging with stakeholders around proposed transactions and 2021 credit maturities
  • Net debt reduced to US$1.91 billion as at end of April (31 December 2019: US$1.99 billion)

Operational highlights

  • Production averaged 70 100 boe/d to end of April, impacted by a recent unplanned Catcher outage (now restored) and cessation of Huntington production; 2020 guidance revised to 65 – 70 000 boe/d
  • Tolmount schedule impacted by Covid-19 with first gas now expected in 2Q21; Tolmount East (Premier-operated) on track for sanction decision by year-end 2020
  • Zama unitisation and sales process ongoing; Mexican regulator expected to instruct unitisation in the coming weeks
  • Operated growth projects on hold, optionality preserved:
  • - Sea Lion project suspended with farm-in documentation agreed
    - Tuna appraisal to be fully funded, subject to final approvals
    - Highly prospective exploration acreage retained with deferred drilling commitments

Tony Durrant, Chief Executive, commented: “We are proactively managing the business in these challenging times and remain focused on the welfare, health and safety of our people. We continued to generate free cash flow during the period and, based on the current forward curve, expect to be broadly free cash flow neutral for the full year, benefitting from our hedging programme and action taken to reduce our expenditure.”

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