Britain's Premier Oil lifted its full-year production guidance as well as estimated resources at a huge oilfield it discovered off the coast of Mexico on Aug. 24.
Premier Oil, the operations of which stretch from Indonesia to the Falkland Islands, expects 2017 production in the range of 75,000 barrels of oil equivalent per day (boe/d) to 80,000 boe/d, up from the previous forecast of 75,000 boe/d, thanks to its strongly performing North Sea fields.
The oil producer, turning a corner after concluding a refinancing deal to survive the oil market downturn, also upgraded its oil-in-place estimates at the Mexican Zama field to 1.2 billion barrels (Bbbl) to 1.8 Bbbl, compared with a less specific previous forecast of more than 1 Bbbl.
“This looks a positive set of results driven by a strong operational performance ... cash flow almost tripled and deleveraging has started,” Panmure Gordon analysts said.
Premier Oil's cash flow from operations rose to $292 million in the first half of 2017, up from $109 million in 2016, while net debt has fallen to $2.74 billion from $2.77 billion at the end of 2016.
Premier Oil's shares traded up to 3.5% higher on Aug. 24, but fell later in the session in line with its peers, pressured by weaker oil prices.
After taking a strong financial blow from the oil downturn that coincided with hefty spending commitments on new fields, Premier Oil is now working on further reducing debt, to be accelerated by the startup of its North Sea Catcher field by the end of 2017.
The discovery of the Zama field, which Wood Mackenzie analysts called one of the 20 largest shallow water finds in two decades, has provided further momentum for the Premier Oil.
“Initial scoping estimates are that Zama has very low breakeven, perhaps as low as $28 a barrel. It looks like a world-class asset that will fit well into our portfolio,” Premier's CEO Tony Durrant said.
The oil producer, which in 2016 bought E.On's North Sea assets for $120 million, has also reduced development costs at its Tolmount gas field in the North Sea by $175 million through the sale of its stake in the infrastructure part of the project.
Premier agreed that field partner Dana Petroleum and Antin Infrastructure Partners will build and operate the platform and pipeline of the project in exchange for a yearly usage tariff.
Premier Oil retains its 50% interest in the field.