Premier Oil plc - Explorer & Producer

Trading update
13 March 2020
Following the announcement of Premier's 2019 Full Year Results last week, the Group provides the following trading update in light of the current market volatility.

Premier's assets continue to perform well with production to the end of February of 76.6 kboepd.  Full year production guidance of 70-75 kboepd is reiterated, before the impact of the proposed UK acquisitions.

Premier has hedged c. 30 per cent of its full year 2020 oil and gas entitlement production at an average oil equivalent price of $60/bbl.  This includes 40 per cent of the Group's oil production for the first half of the year hedged at $64/bbl.   A full schedule of the Group's hedging programme is set out at the end of this statement and is consistent with that released in the Group's 2019 Full Year results.

The Group retains significant liquidity. It has unrestricted cash of $135m and undrawn facilities of c.$330m, as at the end of February. Premier's 2020 cash flow breakeven price is under $50/bbl and a $5/bbl move in the oil price point forward is expected to result in a c.$50m move in free cash flow on a full year basis.  This includes the benefits of the hedging programme and is based on capex guidance of $470m and new operating cost (including leases) guidance of c. $20/boe.  As well as maintaining liquidity, Premier is focused on managing its forward covenant position which could be impacted by ongoing oil price weakness.

Discussions are already underway regarding the Group's ability to reduce its 2020 capex programme. Initial analysis suggests that at least $100m of savings and deferrals is achievable with potential for further reductions.  Assuming a $100m reduction in planned 2020 capex and $35/bbl oil price for the remainder of the year, the Group would expect to be broadly cash flow neutral in 2020.  This does not take into account positive cash flows from the proposed UK acquisitions or potential disposal proceeds.  

With regards to the proposed acquisitions and extension to the Group's credit facilities, the court hearing to sanction the creditor schemes of arrangement is scheduled to commence on 17 March. Premier will provide an update on the next steps in the process once the sanction hearing has taken place.

Enquiries
Premier Oil plc                                                                  Tel: 020 7730 1111
Tony Durrant, CEO; Richard Rose, Finance Director
Camarco                                                                              Tel: 020 3757 4983
Billy Clegg; James Crothers

The information contained within this announcement is deemed by Premier to constitute inside information as stipulated under the Market Abuse Regulation. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Premier is Andy Gibb (General Counsel).

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