U.K. oil producer Premier Oil on March 13 said it had identified at least $100 million in potential savings on its 2020 capital spending plans as it and other rivals scramble to adjust to the plunge in global crude prices.
Oil prices were set for their worst weekly drop since the 2008 financial crisis, with major oil producing countries planning to add more crude to an oversupplied market.
Premier expects to be broadly cash flow neutral in 2020, assuming a $100 million reduction in planned 2020 capex and $35 per barrel oil price for the rest of the year.
The oil and gas explorer, under pressure from creditors to rein in spending, reaffirmed its full-year production outlook of 70-75 kilo barrels of oil equivalent per day but said its forward covenant position could be impacted by ongoing oil price weakness.
Premier joins oil major Chevron Corp. and Occidental Petroleum Corp. in exploring ways to cut spending amidst the crash in prices.
Debt holder ARCM, a hedge fund with a large short position in Premier’s stock, on March 12 again urged the oil company to focus on its cash flow and balance sheet, and abandon its proposed acquisitions.
However, the majority of Premier’s creditors have already voted in favor of the company’s new debt structure for its $800 million North Sea acquisitions.
Western Europe’s biggest producing oil field is now expected to hit a daily output rate of 470,000 barrels in early May, above the 440,000 barrels per day (bbl/d) peak that had initially been penciled in for mid-year, the company said.
All the blocks are offered in the western part of the Norwegian Sea, with interested parties asked to submit comments in a public hearing by May 11, the oil and energy ministry said.
Drillers cut 40 oil rigs in the week to March 27, bringing down the total count to 624, the lowest since March 2017, energy services firm Baker Hughes Co. said in its weekly report.