Sector News

Premier Oil puts Pakistan assets on block after “attractive” offer

July 9, 2015
News
(Reuters) – Oil producer Premier Oil has put its Pakistan business up for sale after receiving an “attractive” offer from an unnamed party, Chief Executive Tony Durrant said on Thursday.
 
Premier Oil’s Pakistan interests, which includes stakes in producing gas fields, has been generating around $30-50 million in surplus cash for the company, Durrant said, without elaborating on details on the offer received.
 
“We’re going to take the opportunity to show other people who would be interested in Pakistan and see if any of them reach valuation on a fully termed up final offer,” Durrant told Reuters, adding a deal could be made by the end of the year.
 
Analysts at RBC estimated the assets are worth around $150 million.
 
Shares in Premier Oil were 3.4 percent higher in early trading.
 
“Operationally, Premier reported good production performance in H1 and was successful in bringing operating costs down and maintaining its net debt position flat at $2.1bn in 2015,” Ritesh Gaggar, analyst at GMP Securities, said in a note.
 
The London-listed firm, whose operations stretch from the Falkland Islands to Indonesia, also said in its trading update it had raised its 2015 exploration budget by $20 million to increase spending on its exploration project in the Falkland Islands, where it has made an oil discovery.
 
An increase in exploration spend contrasts with its industry peers which have cut back on investments because of lower oil prices.
 
Premier Oil said weak oil prices and lower production would result in a 34 percent year-on-year drop in first-half revenue to $580 million. The company is scheduled to report half-year results on August 20.
 
Payment negotiations with suppliers and contractors, as well as redundancies helped Premier Oil reduce costs by $200 million below levels first expected for the first half of the year, Durrant said.
 
As a result, the company’s net debt remained flat at $2.1 billion in the first half of the year despite investments in new projects in the North Sea and the Falklands.
 
By Karolin Schaps (editing by Jason Neely and Jane Merriman)

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