PREMIER Oil has declared it expects ramp up production to up 85,000 barrels of oil equivalent per day this year, as output from its giant North Sea Catcher field steps up in the first half.

London-based Premier confirmed output from Catcher, located east of Aberdeen, will peak at 60,000 boepd in the first half, having brought the field into production ahead of schedule and below budget on December 23. It is currently producing 20,000 boepd from Catcher during the ramp up phase.

Chief executive Tony Durrant has previously flagged the field’s potential to generate big sums of cash for Premier this year. It expects revenue for 2017 to be in the region of $1.09 billion, up from $983 million in 2016, reflecting both higher production and realised commodity prices. Full-year operating costs are estimated to be have been $16.5 per barrel of oil, which is expected to climb to $17-$18 next year because of disposals and the ramp up of production from the Catcher area.

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The company noted that drilling on the 14th well in the Catcher field was now complete. Premier forecasts that total expenditure on the field, which it has developed with Edinburgh-based Cairn Energy, will be $1.6 billion, 29 per cent lower than the previously guided forecast estimate. The reduction reflects the sharp fall in the cost of support services in the North Sea since the crude price collapsed in late 2014, which led to investment and jobs being slashed.

Underlying its confidence in the North Sea, the company confirmed it is on track to sanction the development of the Tolmount gas project this year.

“Fully termed agreements with Dana Petroleum and CATS Management Limited in respect of the infrastructure partnership for the Tolmount development are being progressed ahead of final investment decision,” Premier said.

However, Premier again highlighted the difficulties it has faced on its Solan field west of Shetland, where production rates have been disappointing. Premier, whose moves to bring the field into production were hampered by bad weather, said its income statement for 2017 will include an impairment charge of between $200 million and $250m in respect of Solan.

“The impairment charge is driven by a reduction in the 2P (proven) reserves expected to be recovered from the asset over its economic life,” Premier said. “This does not take account of any upside from the deeper Triassic play on the Solan licence or the impact of any potential third-party volumes across the Solan infrastructure.”

Premier, which unveiled a “world class” off Mexico last year, hiked its overall production by five per cent last year to 75,000 boepd, in line with expectations. That came as it increased its production from UK assets by 20 per cent to 39.5 boepd, reflecting a full contribution of the assets it acquired from E.ON in 2016.

Production from UK assets increased despite an unplanned shutdown in a number of fields last year, principally the Elgin-Franklin and Balmoral area, due to a hairline crack being identified in the onshore section of pipeline.

The period saw Premier dispose its Wytch Farm onshore oil field licences in Dorset to Verus Petroleum for $180m, and its Pakistan business for $65.6m cash to Al-Haj Energy.

Premier shares added 1.7p to close at 100.2p.