By Mark Williamson

NORTH Sea heavyweight Premier Oil has recouped its investment in a massive field off Scotland within two years of starting production in a success that will help stimulate interest in the area.

Premier announced yesterday that it had achieved cash payback on its investment in the $1.3 billion Catcher Area project at the end of October, 22 months after first oil.

With the London-based firm hailing the “extraordinary operating efficiency” it has achieved on Catcher, the update will likely be regarded with keen interest in the wider North Sea oil and gas industry.

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Premier took a big risk by deciding to proceed with the investment in the 100 million barrel Catcher field in spite of the sharp fall in the oil price since 2014. Edinburgh-based Cairn Energy partnered Premier in the $1.3 billion development.

The firms bucked a trend which saw many firms slash investment in the North Sea in response to the crude price plunge.

While Brent crude is still trading at around $50 per barrel less than the $115/bbl it fetched in June 2015, Catcher is now helping both firms generate huge amounts of cash in the North Sea.

Premier’s chief executive Tony Durrant noted: “We are generating significant free cash flow, which is materially deleveraging our balance sheet. At the same time, we are actively managing our portfolio and selectively progressing growth projects at the right exposure.”

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Premier highlighted the appeal of other North Sea developments in yesterday’s update.

The company expects to start production from two discoveries near Catcher in 2021, which will help maintain output from the area.

Work on the Tolmount field development in the North Sea is on schedule, with first gas expected next year.

The company noted it made a significant commercial discovery with the Tolmount East well in October. It said a fast track development of the find is in prospect.

Premier acquired its interest in Tolmount in 2016 through the $120m acquisition of German utility E.ON’s North Sea portfolio, which also included interests in mature fields which have performed well.

For example Elgin Franklin has been producing ahead of expectations. Premier is eyeing a further extension to the operating life of the Huntington field.

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Mr Durrant has made clear that Premier would consider making further acquisitions in the North Sea. He said in March that there were powerful commercial reasons for the firm to continue to grow in the area.

But the results of a foray by Premier into the West of Shetland area have been disappointing. Production from the Solan field averaged 3,600 barrels oil equivalent per day in the ten months to October 31. When Solan was brought on stream in 2016 it was expected to produce 20,000 boepd or more.

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Premier has also made progress overseas in recent months. The company said there has been significant industry interest in the prospect of buying its stake in the Zama find made off Mexico in 2017

Premier Oil produced an average 79,400 boepd in the first 10 months, compared with guidance of 75,000-80,000 boped. Its 50 per centshare of Catcher production was worth 34,500 boepd.

Premier cut net debt by $300m to $2.03bn as at October 31.