NORTH Sea heavyweight Premier Oil has said the giant Solan field off Shetland achieved only around a third of the expected output in recent months amid continued challenges on what is a flagship project.
London-based Premier produced an average 7,300 barrels oil equivalent daily from Solan in the four months to April.
When it started production from Solan in April last year, Premier expected to be producing 20,000 to 25,000 boed from the field by the end of 2016.
In an update on trading in the first four months, Premier highlighted the impact of the failure of a pump on the Solan field in February.
This adds to a list of problems that Premier has faced off Shetland, a relatively under-explored area where sector champions believe there may be lots of big finds to be made.
In March Premier slashed $650 million off the valuation of Solan after reducing estimates of the amount of oil it will recover from the field and cutting its long term oil price assumption, to $75 per barrel from $80/bbl.
Solan came onstream around 18 months later than originally hoped.
Premier has highlighted the impact of low productivity and bad weather on the development programme for the field.
But it has been making good progress on other North Sea assets amid tough market conditions.
UK production increased to 45,700 boed in the first four months from 17,600 in the same period last year.
Premier felt the benefit of the acquisition of the North Sea portfolio of German utility E.ON last year, for $120m.
It said the former E.ON assets continue to exceed expectations. Chief executive Tony Durrant noted: “The E.ON transaction has already reached payback.”
Work is going well on the giant Catcher development 110 miles east of Aberdeen. Premier expects to bring it onstream later this year.
The results of development drilling completed so far suggest output may level out at higher rates than thought previously.
Premier is in the advanced stages of planning for the Tolmount gas development off Eastern England. It expects to decide in the first half of next year whether to go ahead.
The group, which also has assets in Asia and Africa, increased production 44 per cent to 82,600 boed, in the first four months, compared with full year guidance of 75,000 boed.
Premier expects to complete a refinancing shortly after lengthy talks with lenders.
Separately Centrica, which owns Scottish Gas, has helped make the case for investing in mature North Sea fields by approving a £35m plan to extend the life of one of its assets.
The company will drill an additional production well on the Chestnut field, which it expects will allow it to triple production, to around 14,000 boed, and to keep pumping for an additional three years.
The investment will secure 70 jobs on the production vessel that is used on the field.
Centrica said Chestnut had been an important part of its North Sea portfolio for nearly 10 years. It said assets like Chestnut underline the importance of maximising the potential of as many North Sea fields as possible,
The Oil and Gas Authority said: “The potential production from this incremental Chestnut field investment demonstrates the value of focused late-life management.”
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