Premier Oil climbs back into profitability

Premier Oil PLC CEO Charles Jamieson said Monday his company had pulled itself into the black after 3 years of losses, recording net profits of �6.1 million, compared with a 1999 deficit of �27.7million. The UK independent�s operating profit swung from a loss of �6.3 in 1999 to a gain of �35.2 million last year, while its turnover leaped from �26.2 million to �115.7 million.


Darius Snieckus
OGJ Online


LONDON, Mar. 12�Premier Oil PLC CEO Charles Jamieson announced Monday that his company had pulled itself into the black after 3 years of losses, recording net profits of �6.1 million, compared with a 1999 deficit of �27.7million.

The UK independent oil and gas company saw its operating profit swing from a loss of �6.3 in 1999 to a gain of �35.2 million last year, while its turnover increased from �26.2 million to �115.7 million during the same period.

At the end of last year, Premier had booked reserves totaling 488.4 million boe, up from 460.4 million in 1999, as well as some 149 million boe of discovered reserves which, Jamieson said, the company was conservatively treating as "unbooked" but hoped to commercialize within the "next 12-14 months."

He stressed that his company had banished its "poor (exploration) reputation in the late-1980s and early-1990s" by having grown its reserves by an average 90 million boe/year since 1995 at a finding and development cost of $2.80/boe.

Despite Premier's production falling slightly in 2000 to 27,300 boe/d, Jamieson stressed that its output was due to climb 85% this year to 50,000-60,000 boe/d, a level that would be sustained over the next 15 years by the independent's long-term gas contacts in the southeast Asia.

"Premier has proven operationally now to be a very good explorer, and extremely good commercializer of gas, and we have given ourselves a very solid production base going forward," he said. "The challenge really is to turn that operating success in to raw value to shareholders."

Jamieson highlighted that Premier's two major sources of new gas production in southeast Asia�the Yetagun development in Myanmar, and the West Natuna project off Indonesia�were progressing as planned.

Yetagun, a $650 million platform and pipeline development managed by Premier and brought onstream last May, saw first sales to Thailand's PTT Exploration & Production PLC the same month and the contracted rate of 200 million scfd come into effect in July. Engineering work on an upgrade at the field, designed to boost capacity in the first instance to 260 million scfd is underway, he said.

The Premier-operated Anoa gas exported project on Natuna Block A is on schedule for completion by May, ahead of the main 22-year gas sales agreement with SembaCorp Gas set to start in July. Early gas deliveries from Anoa, begun in January, said Jamieson, are expected to build to 150 million scfd over the next months, before climbing to plateau production of 325 million scfd.

The company ended the year with net debt "as planned" standing at �445 million as a result of ongoing investment in its major gas developments, but John van der Welle, Premier's finance director, stressed this was the "peak of the cycle in terms of indebtedness."

He said, "We have been investing very heavily over the last 3 years in developments, particularly in Burma and Indonesia, and those investments are reaching a conclusion, hence the vary significant increase to production we are looking toward achieving this year."

The gas alliance Premier entered into with Amerada Hess Corp. and Malaysian state-owned oil and gas company Petronas to secure an equity injection of �136 million in late 1999 to help counter crude price volatility, Jamieson acknowledged, is among the reasons for the "underperformance" of the independent's stock last year.

Contact Darius Snieckus at dsnieckus@ogjonline.com

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