British oil and gas firm Premier Oil has announced a financial and operational update, with delayed production and uncertain finances highlighting the impacts of the Covid-19 pandemic on the country’s oil and gas industry.
The company announced that production had reached an average of 70,100 barrels of oil equivalent per day (boepd) since the start of the year, down from its 2019 annual production of 78,400 boepd, and the 85,900 boepd produced in the same period last year. Premier also announced delays at its Tolmount projects, with the main facility, a 25,000 boepd project, now scheduled to produce its first gas in the second quarter of 2021, while a decision is expected to be made on the proposed Tolmount East project by the end of this year.
“We are proactively managing the business in these challenging times and remain focused on the welfare, health and safety of our people,” said CEO Tony Durrant, explaining the company’s moves to more conservative approaches considering the economic climate. “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.”
Overseas, the company’s assets have been affected by political uncertainty as the pandemic spreads. In Mexico, Premier’s attempts to unitise the Zama field have been interrupted by the government’s decision to declare the field a “shared reservoir”, and the company has suspended work at its Sea Lion project. Premier has also announced deferrals for many of its exploration projects, including drilling in the Ceará basin off the Brazilian coast, which was originally scheduled for July this year.
Despite these challenges, Durrant was optimistic about the future of the oil and gas industry, telling Energy Voice that “the perception … that the oil industry is in financial trouble, [is] not true, generally.”
“The banks are more worried about companies in other sectors with liquidity problems than the oil sector.”