Premier Oil's Production Jumps 43%


LONDON -- Premier Oil reported today on an excellent 2012, and looks set to repeat the trick in 2013.

Overall, production levels rose from 40,000 barrels of oil equivalent a day to 57,700, a gain of 43%. There were modest increases in the U.K. and Indonesia, but Vietnam was the real star, with production jumping from 2,900 barrels to 15,200.

Two major new projects, Huntington and Rochelle, are due to come on line in the next few months. With this planned expansion, Premier is forecasting 2013 production levels of 65,000-70,000 barrels a day.

Looking slightly further ahead, three more projects -- one in Vietnam and two in Indonesia -- are due to begin producing in 2014. With the Catcher project in the North Sea also progressing, Premier could see production rise to around 100,000 barrels a day before too long.

Exploration aplenty
Premier is also targeting the end of 2017 as the date for first oil from the Falkland Islands. It recently acquired a 60% stake in the huge Sea Lion discovery made by Rockhopper Exploration, paying $230 million for the privilege. Of course, with the sovereignty of the islands in dispute, this story has a long way to go.

Premier expects to drill 14 exploration wells during 2013, with the Matang-1 well in Indonesia already under way. In total, these wells will cost $200 million.

Dividend on the way
Premier is also planning to spend a further $900 million on development wells, and already has $1.1 billion in net debt. Despite this, it is planning to pay a maiden dividend when it announced its full-year results at the end of March. Analysts are expecting the payout to be 0.4 pence, which would mean a very modest cash outlay of just £2 million.

One bit of bad news tucked near the end of today's statement was a $160 million of exploration write-offs, but details of how this figure breaks down were not provided. The shares were little changed in early trading, at 370 pence.

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