Premier Oil shares rise as the weaker pound helps it swing to profit
Shares in Premier Oil rose as much 3.59 per cent to 79.25p in opening trading after the independent oil and gas producer returned to profit in the first half of the year.
The figures
Premier Oil reported pre-tax profit of $110m (£83.57m) in the six months to June, up from a loss of $214.6m in the same period a year earlier. It came as a post-Brexit vote weaker sterling effectively reduced its costs, most of which are paid in dollars.
But low oil prices pushed earnings before interest, tax and other items down 59.21 per cent to $182.2m during this period, from $446.7m last year.
The company also increased its full-year production guidance to 68,000-73,000 barrels per day, up from its previous target of 65,000-70,000.
Why it's interesting
The UK's largest independent oil and gas producer is still in talks with lenders regarding its $2.6bn debt pile, despite reports over the weekend suggesting that the parties had reached a deal.
Mike Welton, Premier's chairman, said today: "Given the unsecured nature of our debt arrangements and the number of parties involved it is not surprising that negotiations will take time to conclude but I am encouraged by the progress that has been made to date."
"In the meantime, we have been receiving deferrals in respect of tests to our financial covenants and expect further deferrals to be forthcoming until the process is completed."
What Premier Oil said
Tony Durrant, chief executive, said: "Delivery of a step change in production levels and a leaner operating cost base has addressed the lower commodity price environment."
"Full year production guidance is now increased, which will drive free cash flow generation. We have made substantial progress with our lending group on the principal terms of a refinancing."
"Our project portfolio has been expanded, positioning Premier for future growth at lower cost."
What the analysts said
Liberum said: "Strong first half production, the acquired E.ON assets and the contribution from Solan mean meant that Premier expects production for 2016 to beat earlier guidance. This, along with cost savings, positions it to focus on the balance sheet."