Premier Oil Release 2015 Annual Report and Financial Statements

Strong production performance in 2015, together with the benefit of our hedging programme and extensive cost savings, has enabled the Group to deliver strong cash flows from operations of US$809.5 million (2014: US$924.3 million), despite the low oil price during the year.
The Group is reporting a loss after tax of US$1,103.8 million in 2015 (2014: US$210.3 million loss after tax) largely as a result of impairment charges of US$558.7 million (post-tax) principally on the carrying value of Solan Oil Field, North Sea.
Tony Durrant, Chief Executive, commented:

“Despite the significant reduction in oil and gas prices, reflected in our results today, 2015 was a year in which we exceeded production guidance, added to reserves, achieved notable exploration success and reached agreement on a value-adding acquisition. We also reduced operating costs by over 25 per cent, significantly cut back on current and future development spend and disposed of negative cash flow assets.
Our forward plan includes further actions to reduce debt, positioning ourselves for a prolonged period of lower oil prices, whilst continuing to take actions to build longer-term value for a recovering commodity environment.”

    Operational highlights

Production averaged 57.6 kboepd (2014: 63.6 kboepd), exceeding our market guidance despite disposals of non-core assets
Proposed acquisition of E.ON’s UK assets: strongly value accretive, adds c.15 kboepd of 2016 net production and captures a valuable hedging programme; good progress on approvals with the lending group
Solan first oil is expected shortly; plans for second oil and ramp up to full production progressing in line with previous guidance
The Catcher project is under budget and BW Offshore, our FPSO provider, maintain a delivery schedule for first oil in 2017; ongoing development drilling results are encouraging
Sea Lion Phase 1 project scope modified with lower break-even oil price; new contractual arrangements agreed with Sea Lion partner, and FEED contracts now in place; significant exploration successes at Zebedee and Isobel Deep
Continued portfolio rationalization with the sale of the Norwegian business for US$120 million; Pakistan sales process ongoing

    Financial highlights

Strong cash flows from operations of US$809.5 million (2014: US$924.3 million)
Revenue of US$1.1 billion (2014: US$1.6 billion); loss after tax of US$1.1 billion (2014: US$210.3 million), reflecting non-cash post-tax impairments of US$583.5 million, due to lower near-term oil price assumptions, principally relating to the Solan field
Cost reductions of over 25 per cent delivered for 2015 in operating costs and G&A spend; further actions planned in 2016 to lower cost base
Significant reduction in capex spend for 2016, with further reductions in annual spend forecast in 2017
2016 production guidance of 65-70 kboepd, including a contribution from E.ON
Approximately 30 per cent of 2016 oil production hedged at US$73.4/barrel upon completion of the proposed acquisition of the E.ON UK assets
Significant liquidity with cash and undrawn bank facilities of US$1.2 billion; unsecured facilities not subject to semi-annual redetermination; E.ON acquisition will be materially covenant accretive; further relaxation of covenants may be required if low oil prices persist
See :2015 Annual Report and Financial Statements
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Source: Premier Oil plc
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