Bloomberg News

Premier Oil Expands From Falkland to Cyprus on Rising Cash Flow

August 23, 2012

Premier Oil Plc (PMO), a U.K. explorer with North Sea and Southeast Asian fields, is expanding projects with record cash flow and plans to double its production in the medium term.

Premier has been securing new exploration assets in Kenya, Iraq and the Falkland Islands and is bidding for fields off Cyprus. It plans to invest between $1.2 billion and $1.5 billion in projects a year until 2017, said Premier Chief Financial Officer Tony Durrant. Cash flow will rise from $1 billion next year to $2.5 billion in 2016, when the U.K. Catcher field comes on stream, he said.

“Rapidly our cash flow is overtaking our capital expenditure,” Durrant said in a phone interview.

First-half operating cash flow rose 34 percent to $325.5 million, London-based company said today in a statement. It expects to raise extraction to 75,000 barrels of oil equivalent a day once the Huntington and Rochelle fields come online at the end of the year. Output will further rise to 100,000 barrels in the medium term, up from 40,400 barrels a day pumped last year.

“We have a lot of activity on all fronts, which is really about maintaining the momentum that we have created over the last couple of years to carry on the growth pattern,” said Chief Executive Officer Simon Lockett.

Premier plans to drill “three very important wells” in Norway, the U.K. and Vietnam in the next six months, the CEO said in a phone interview. “What we have been doing is making sure we’ve got the right exploration portfolio core beyond 2013.”

Developing Plans

Premier is developing plans for its $5 billion project off the Falkland Islands after it agreed to join Rockhopper Exploration Plc (RKH)’s Sea Lion field. The political situation around the disputed archipelago is improving with the U.S.’s Noble Energy Inc. (NBL:US) and French government-supported Electricite de France SA stepping in to explore for oil, Durrant said.

“It’s not such a bad combination now,” the CFO said.

Oil discoveries around the Falklands have inflamed tensions between the U.K. and Argentina, which maintains a claim on the territory after losing a war with Britain about three decades ago. The Latin American nation in July warned Premier of illegal exploration around the disputed territory.

In the U.K., Premier has teamed up with ConocoPhillips (COP:US) to drill the high-pressure, high-temperature Lacewing well. In Iraq, it agreed to work with Russia’s OAO Bashneft in Block 12.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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Companies Mentioned

  • NBL
    (Noble Energy Inc)
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    • 1.77
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  • COP
    (ConocoPhillips)
    • $73.21 USD
    • 1.08
    • 1.48%
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