Premier Oil shares drop as unplanned shutdowns dent output

By Rob Davies for the Daily Mail
Updated: 09:13 EDT, 15 July 2011

Shares in oil exploration and production firm Premier oil lurched down nearly five per cent, as unplanned shutdowns dented output.

The company estimates it produced 36.6 thousand barrels of oil equivalent per day (kboepd) in the first half compared to 42.8kboepd in the same period last year.

Enforced production pauses due to a hydraulic leak at its Balmoral site and maintenance at Wytch Farm in Dorset were responsible for the output slowdown.

Growth plan: New oil wells in Indonesia should help revive Premier

However, the firm expects new projects in Vietnam and Indonesia to take it to a target of 60kboepd by the end of the year and 75kboepd in 2012, once other projects come on stream.

Premier said: ‘Our development teams in the North Sea and Asia are already focused on delivering the next stage of Premier’s growth.’

But the lack of certainty around these projects saw the stock fall 21p to 413.95p.

The company is also relatively isolated from chancellor George Osborne’s North Sea windfall tax, due to more than a $1billion in tax allowances it has in reserve.

The setback at Wytch Farm came just over a fortnight after Premier raised its stake in the Dorset field following a £60m deal with BP.

The transaction raised Premier’s holding in largest onshore oil site in western Europe from 12.4per cent to 30.1per cent.

The disposal was part of BP’s plan to boost its coffers by £20billion as it scrambles for cash to pay for last year’s Gulf of Mexico disaster. French explorer Perenco is the controlling shareholder in Wytch Farm.