Premier Oil, an independent exploration and production company, has curtailed its capital expenditure program in order to soften the blow of the low oil price environment.
Development capital expenditure for the full year 2015 is now expected to be around $850 million, lower than previous guidance of $900 million as certain costs are phased into 2016, the company said on Thursday.
In addition, exploration spend is now expected to be approximately $200 million, below previous guidance of $240 million, as completion of the Falklands drilling campaign moves into 2016.
Premier also said that planned capital expenditure was anticipated to be substantially lower in 2016, reflecting the completion of the Solan development and limited committed development expenditure beyond the ongoing Catcher project.
The company’s total development and exploration expenditure in 2016 (including deferrals from 2015) is expected to be aroun $650 million, but remains subject to ongoing budget discussions.
Tony Durrant, Chief Executive, commented: “Looking ahead, we see reduced capital expenditure and significant cost reductions for both our current and future projects to mitigate the current oil price environment.”
Solan, Catcher progressing well
Premier’s oil production so far this year averaged 57.5 kboepd, in line with expectations, but lower compared to 64.0 kboepd in 2014.
The company says it remains on track to deliver full year production ahead of its current guidance of 55 kboepd.
Premier Oil also said on Thursday that two of its UK North Sea projects, Solan and Catcher, were on track for first oil before the end of the year and in 2017, respectively. Cash spend up until October 31, 2015, on the Solan project stood at $1.76 billion.
In the Falkland Islands, Premier continues to mature the development plan for the Sea Lion Phase 1a and pre-FEED work is now complete.
The company says it is currently in discussions with its joint venture partner and the Falkland Islands Government to decide upon the start date and duration of the FEED program. Development financing arrangements will be progressed during FEED, and this work will include a farm down process to bring in an additional upstream partner, the company concluded.
Offshore Energy Today Staff