North Sea-focused Premier Oil expects to slash its $2.8 billion debt significantly in 2018 by exceeding its 2017 production target and lowering spending, it said on May 15.

The oil and natural gas producer's shares rose 3.4% by 0925 GMT after it also formally kicked off a debt refinancing deal and set a date for a shareholders' meeting for its approval. Premier did not say by how much it would reduce the debt, which it has struggled to contain.

BMO Capital Markets analyst David Round said this was "a positive statement from Premier demonstrating good momentum in the business now that the refinancing looks out of the way."

Premier maintained its production guidance of 75,000 barrels of oil equivalent per day (Mboe/d) for 2017. However, it expects to beat its target due to a near-tripling of production in the North Sea ahead of the startup of its Catcher Field in December.

"We will look again at guidance either for our July trading update or August interim results, but our internal projections are certainly to beat guidance for the full year," CEO Tony Durrant told Reuters.

The company reported a 44% rise in its production to 82,600 boe/d for the four months ended April 30.

Premier lowered its 2017 capex forecast to $350 million from $390 million.

It plans to generate profits in 2017 at oil prices of $50/bbl, and is slightly ahead of the target thanks to higher oil prices and production, asset sales and lower spending, Durrant said.

A stronger British pound, however, offset many of those gains, leading to net debt to remain little changed.

Offshore