Boosted by asset acquisitions and weaker sterling after the Brexit vote, the UK's biggest independent oil producer Premier Oil reported on Thursday a return to profit in the first half of 2016, but said a debt restructuring deal with its lenders would take more time to complete.
London-listed Premier Oil reported a pre-tax profit of US$110 million for January to June, compared to a loss before tax of US$214.6 million for the first half last year.
Some analysts had expected Premier Oil to unveil details of its refinancing deal with the first-half figures or at least some details to emerge at some point this week. The group's chairman Mike Welton, however, said in the results release:
"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".
Premier Oil's net debt was US$2.635 billion in Q1 2016, up from US$2.242 billion at end-December 2015, but it is negotiating financial agreements for loans it had taken and expects to wrap up talks and implement revised debt covenant agreements in the second half of the year.
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Debt may be high but Premier Oil's financials were boosted by the weaker sterling and, as chief executive Tony Durrant told Reuters: "A weaker sterling exchange rate means it costs us less dollars to pay for our investments."
Premier Oil noted that the depreciation of the British pound would also help its forward opex, capex and debt, and raised its production guidance for this year to 68,000 -73,000 barrels of oil equivalent per day (boepd) from the previous guidance of 65,000-70,000 bpd.
In the first six months of 2016, Premier Oil - which started pumping oil from the Solan field in the North Sea - saw its average daily output at 61,000 barrels compared with the average 60,400 bpd for the first half of 2015.
By Tsvetana Paraskova for Oilprice.com
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