Premier Oil has launched a formal sales process for the sale of its interest in the Zama field offshore Mexico as the company aims to further reduce its debt burden.

The company holds a 25% non-operated interest in the large Zama oil discovery located in Block 7 of Sureste Basin in the Gulf of Mexico. The decision to offload the stake in the discovery is motivated by the company’s strategic priority to bolster its balance sheet.

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In the half-year results announced by the company on 22 August, it was stated that the net debt reduced to $2.15bn from $2.33bn as of 31 December 2018.

Talos Energy, the operator of the Zama field, completed appraisal campaign in July 2019. The appraisal increased gross resource estimate to 810 million barrels of oil equivalent (P50). Premier Oil has stated that it will retain other offshore licence interests in Mexico.

Meanwhile, Premier Oil has also initiated a formal farm-down process of its 60% operated interest in the fully appraised Sea Lion field in the North Falkland basin off the Argentinean coast.

The farm-down will allow the company to optimise its participation level in the Sea Lion project. The project will develop 330 million barrels of oil, net to the company, over two phases.

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Premier Oil chief executive Tony Durrant said: “I am pleased to report another strong performance for Premier where we have exceeded our financial and operational targets for the period.

“The company’s strong cash flow is driving debt reduction and the Zama divestment and Sea Lion farm-down processes are targeting further strengthening of the balance sheet, which remains the group’s highest priority.

“Premier’s operated Tolmount gas project, due on-stream next year, and the addition of good quality exploration and appraisal acreage offer significant low cost opportunities for future value growth.”