Premier Oil will cut spending on exploration and development next year by more than 50 per cent in preparation for sustained weakness in commodity prices.
The London-based oil producer, with assets in the North Sea and Falkland Islands, plans capital expenditures of $500 million in 2016 compared with spending of $1.14 billion this year, the company said in its earnings statement Thursday.
It also agreed to amend contract terms with banks and bondholders to give more flexibility on debt if weak oil prices persist.
“We have continued to capture sustainable savings in our operating costs, to defer discretionary capex,” the company said.
“The weakness in the oil price post period-end serves as an important reminder that we must sustain these efforts.”
The company reported a net loss of $375.2 million for the first half compared with a profit of $172.7 million a year earlier.
Sales fell 35 per cent to $577 million. Oil and gas production averaged 60,400 barrels equivalent a day compared with 64,900 barrels a day in the same period a year earlier.
Brent crude, the benchmark for more than half the world’s oil, has dropped by about 50 percent in a year amid a global supply glut.
The North Sea, where many fields first tapped in the 1960s are now depleted, is one of the world’s most expensive areas to operate.
Bloomberg
