PREMIER Oil has moved to cut its capital expenditure by $100 million this year and braced for a volatile

market ahead.

The company outlined the plan in a statement to the London Stock Exchange the day after the FTSE 100 Index was hit by its greatest one-day fall since 1987 and coronavirus uncertainty sent more shockwaves across the world’s markets.

London-based Premier said that “as well as maintaining liquidity” it is focused on “managing its forward covenant position which could be impacted by ongoing oil price weakness”.

The crude price plunge was the backdrop as Premier faced calls to scrap two big North Sea acquisitions it landed in January that are worth up to around $900m. The oil market took a jolt as the impact of coronavirus emerged this week and this was exacerbated by fears of a price war between Russia and Saudi Arabia, and the US travel ban.

Brent crude was up $2.50, or 7.3 per cent at $35.62 per barrel on Friday from Thursday after a 21% drop on last week.

Premier won backing for the North Sea acquisitions from other creditors and will seek the approval of the Court of Session in Edinburgh for the related schemes of arrangement next week.Premier said in its statement: “Discussions are already under way regarding the group’s ability to reduce its 2020 capex programme. Initial analysis suggests that at least $100m of savings and deferrals is achievable with potential for further reductions. Assuming a $100m reduction in planned 2020 capex and $35/bbl oil price for the remainder of the year, the group would expect to be broadly cash flow neutral in 2020.

“This does not take into account positive cash flows from the proposed UK acquisitions or potential disposal proceeds.” Premier shares rallied slightly at 25% up to 15.8p, but a week ago this was 67p.