NORTH Sea heavyweight Premier Oil has provided further evidence of how tough conditions are in the area following the oil price plunge triggered by the coronavirus.
In a trading update chief executive Tony Durrant made clear the company has put the focus on saving cash amid what he called “challenging times”.
The company expects to cut running budgeted running costs by around $100m.
Spending on new assets is set to fall by $140m to $330m.
The economy drive will mean the company will have to put its North Sea development drive on hold.
Work that was expected to lead to an increase in output in the area of the bumper Catcher field east of Aberdeen has been deferred.
Meantimes the expected start of production from the giant Tolmount gas field has been pushed back from this year to the second quarter of 2021.
The delay at Tolmount highlights the logistical challenges posed by the coronavirus for oil and gas firms. It follows a temporary lockdown at the yard where the platform that will be used on the field will be built.
Premier said it has reduced manning levels on all of its installations to ensure continued safe operations and has “significantly reduced the scope of its planned shut downs to include critical maintenance and committed project work only”.
The cut-backs will be bad news for the struggling North Sea supply chain.
Premier, which also has acreage in Asia and of the Falkland Islands, said it retains adequate liquidity.
Nonetheless the company noted it has entered discussions with its lending group with a view to potentially securing waivers from some of the covenants attached to its borrowings.
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