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March 5, 2020

Premier Oil releases annual results and makes net-zero pledge

UK oil and gas exploration and production company Premier Oil has released its 2019 end-of-year results and made a net-zero carbon emissions pledge.

By Matthew Farmer

UK oil and gas exploration and production company Premier Oil has released its 2019 end-of-year results and made a net-zero carbon emissions pledge.

Premier made $1.58bn in sales revenues, up from $1.40bn in 2018. Post-tax, its profit was $164.3 million.

The company plans to reach net zero on the emissions it creates and causes in its operations, known as Scope 1 and 2, by 2030. It will cut 60% of these emissions by 2025.

In a video, CEO Tony Durrant said: “We must reduce the emissions from our operations, and we are working hard on the engineering side to do that. But beyond that, we’re also making a commitment today that all future development projects will be net-zero, and we’ll use carbon offsetting measures to achieve that.”

The upcoming Sea Lion project, off the UK-owned Falkland Islands, will be the company’s first operational project designed to minimise emissions.

Exploration in the Americas

In April, the company expects results from tests on the Malguk-1 field in Alaska, US. Off the coast of Brazil, Premier holds equity in three wells in the Ceará basin. One of these is expected to hold at least 315 million barrels across two resources. The company expects it will spud before the end of Q3 2020.

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In Mexico, the company is part of a joint venture in Block 7, drilling the Zama field. Premier is attempting to sell its stake in the block, but the reserve is also claimed by Petroleos Mexicanos (Pemex). Pemex controls the neighbouring block, which also drills into the Zama field. The share of resources is not yet decided by the Mexican government.

During the year, Premier Oil was involved in a legal dispute over refinancing. The company wanted to raise money to purchase North Sea assets from BP, but some shareholders objected to the idea.

Court sanction hearings begin on 17 March. If successful, the company expects to complete the acquisition in Q2 or Q3.

Elsewhere in the North Sea, the Tolmount gas field is expected to begin production in Q4 2020.

Durrant said: “Premier made significant progress against its strategic targets during 2019. Strong operational performance resulted in record free cash flows and reducing debt levels. We took material steps to commercialise our reserve and resource base and added to our exploration acreage position. The proposed acquisitions will add material cash-generative UK production.”

The report noted the global slump in oil prices caused by coronavirus, but Durrant said over-performance by North Sea assets would offset the drop in the price of oil.

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