Premier Oil's Loss Deepens in 2015 as Global Oil Industry Falls
Premier Oil Plc, a UK-based oil and gas company, reported a widened loss for the year ended December 31, 2015, owing mainly to the slump in crude prices. The company posted a loss after tax of $1.1 billion for the year 2015, compared to a loss $210.3 million in 2014.
The oil explorer's annual loss per share widened from 216.1 cents from 40.3 cents in the year ended December 31, 2014. Pre-tax loss increased to $829.6 million from $362.5 million in the previous year.
Loss from continuing operations widened to $1.07 billion from a loss of $226 million in the prior year. On a per share basis, loss from continuing operations amounted to 209.6 cents in 2015, compared to a loss of 43.3 cents in the year 2014.
Operating loss for the year 2015 widened to $707.8 million from $225.7 million in 2014. The company's sales revenue declined to $1.07 billion from $1.63 billion in the previous year. Cash flow from operations totalled $809.5 million in 2015, down from $924.3 million in 2014. The company expects production, including E.ON contribution, to be in the range of 65 -70 kboepd in 2016.
Tony Durrant, chief executive officer of Premier Oil, said that the firm managed to outstrip its production forecast in 2015 amid the lower energy prices globally. He added the company trimmed its operating expenses by more than 25% and also disposed assets with negative cash flow. The company also aims to lower its debt and position itself to sustain the weak oil prices in the industry.
Premier Oil's production in 2015 averaged to 57.6 kboepd, down from 63.6 kboepd last year. The purchase of E.ON's assets in the UK added c.15 kboepd to its total production in 2016. Moreover, the company expects to receive oil from Solan field soon.
In addition, the firm has requested the government to promote major infrastructure policies in the North Sea as this move would lure fresh investment. The slump in the global oil industry has created a fear over the prospect of the North Sea, however Durrant believes that monetary assistance from the government could attract fresh investment into the North Sea. According to him, tax rate reduction would make only a slight difference to support the investment.
The oil companies pay a tax rate of 30 pence, while other companies pay a tax rate of just 20 pence. Moreover, the firms in North Sea pay a supplementary tax of 20 pence and elder oil fields pay a further 17 pence as revenue tax, as reported in The Telegraph.
The oil explorer is also seeking to discuss with its lenders regarding its loan terms in order to evade rupture of its agreement. Like its peers in the industry, Premier Oil is also impacted by the collapse in the crude prices, which forced the company to report writedowns of over $1 billion. The UK Brent has dropped to below $35 per barrel from $115 per barrel in 2014, Financial Times said.
The fall in the global oil industry owing to many factors like surplus supply from OPEC nations, arrival of Iran to the oil market, has affected many oil companies globally. Premier Oil is hoping to sustain itself in the industry amid this global oil fall.
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