PREMIER Oil has turned heads amid the crude price plunge by making big bets on giant North Sea field developments which may not pay off for ages.
However the company’s results statement yesterday show ed it had turned a quick profit on a much lower key expansion move in the North Sea.
The London-based firm revealed the cash returns generated from the mature North Sea assets it bought from German utility E.ON for $120 million last year had already exceeded what it paid for them.
Premier was operating in a buyers’ market. Sector players have noted assets are for sale at attractive prices in the North Sea, as some firms look to raise funds to invest elsewhere or cut debt.
But Premier noted production from the former E.ON assets continued to exceed targets in the first half.
The Huntington field did especially well reflecting improved reservoir management.
Premier highlighted the effectiveness of low cost interventions on several UK fields. These helped it achieve a significant increase in production and delivered cash payback within a few months.
While cost cutting measures also helped, Premier’s experience suggests it can make good sense to invest in boosting production from UK assets, even at low oil and gas prices.
But many firms have slashed spending on all but essential maintenance work on mature North Sea assets.
Oil services giant Wood Group complained on Tuesday it had seen a significant reduction in modification work in the North Sea.
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