Premier Oil

Premier Oil

Premier Oil is an independent UK oil company with gas and oil interests in the UK,Asia and Africa. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It is a relatively small company, devoted entirely to the 'upstream' sector of the industry - the exploitation of oil and gas - as opposed to the 'downstream' refining and retail sector. The company had 309 employees and sales of US$358.8 million in 2006.

History

Early days

Premier Oil started life as the Caribbean Oil Company, which was registered in the UK in 1934 to pursue oil and gas exploration and production activities in Trinidad [ [http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=13162&username=&ac= Company's origins] ] . Two years later, it was publicly floated as Premier (Trinidad) Oilfields [ [http://www.clfinancial.com/company_eap.jsp?page=eap_pogl Public Flotation] ] . For the next two decades, the company concentrated its attention on oil production in Trinidad [ [http://www.gstt.org/history/history%20of%20oil.htm History of Oil exploration in Trinidad] ] .Having acquired its first interest in the North Sea in 1971, Premier gradually expanded its presence on the UK continental shelf, merging with the Ball and Collins North Sea Consortium in 1977 [ [http://www.corporatewatch.org/?lid=297 Details on Corporate Watch] ] to gain significant interests in the North Sea as well as properties in Sudan and West Africa.In 1984, the company took a 12½% stake in the onshore oilfield at Wytch Farm in Dorset [“Geology of The Dorset Coast” House, M.R. London,The Geologists' Association 1993 ISBN 0900717580] . This acquisition transformed the company's reserve base and cash flow and, even today, continues to make an important contribution to Premier's revenues, thanks to large scale expansions which have only become technically feasible with modern technology.

In the late 1980s and early 1990s, Premier enjoyed a series of exploration successes, notably the discovery of the Qadirpur [ [http://www.ppl.com.pk/PPL-page.php?pageName=qadir How site has developed] ] gas field in Pakistan in 1990, the Fife and Angus fields in the UKCS and the Yetagun gas field in Myanmar in 1992, as well as the offshore extension to Wytch Farm.

In 1995, Premier acquired Pict Petroleum [ [http://www.acorn-ps.com/web/page/oilgas/oilcom/matable.htm Details of merger] ] . As a consequence, Amerada Hess which had a substantial stake in Pict came to hold 25% of Premier's enlarged equity. From this point, Premier was participating in numerous North Sea oil and gas fields, including Fife, Fergus, Galahad and Scott.

Supported by production revenue from the UKCS, the company turned its attention to the Far East with a view to developing energy resources to serve this region's rapidly expanding economies [ [http://search.ft.com/ftArticle?queryText=Premier+Oil+Galahad+Scott&y=4&aje=false&x=12&id=070806010184&ct=0&nclick_check=1 Latest developments] ] .

Current areas of Operation

Middle East/Pakistan

General

Premier is setting up a joint venture with the Emirates International Investment Corporation (EIIC) which will invest in oil and gas projects across the Middle East region and North Africa.

Pakistan

In 1998, Premier and Shell brought together their exploration and production interests in Pakistan to form a joint venture company, PSP (Premier & Shell Pakistan). In May 2001, Premier announced an asset swap with Shell which dismantled the partnership and, in September 2001, the formation of a new joint venture with Kufpec called Premier Kufpec Pakistan (PKP). Premier and Kufpec unwound the PKP joint venture in July 2007, and Premier now holds its equity stakes in five world scale producing gas fields, Qadirpur, Bhit, Zamzama, Kadanwari and Zarghun directly.

Asia

Indonesia

In 1996, Premier acquired Sumatra Gulf Oil Ltd which gave it a majority interest in the Natuna Sea Block A offshore Indonesia, comprising the Anoa oil field and substantial gas reserves, as well as exploration prospects. It also acquired Discovery Petroleum thereby obtaining an interest in the Kakap license, also in the Natuna Sea, which added oil and gas reserves and provided access to further prospective exploration acreage. In 2002, Premier sold part of its interest in West Natuna (See Restructuring below).

Today, Premier supplies the gas used to generate one third of Singapore's domestic electricity needs down a 650km pipeline from the Anoa field into Singapore.

In April 2006, Premier purchased a 16.67% equity in North Sumatra Block A. This stake was increased to 41.7% in January 2007. Premier plans to develop the convert|650|Gcuft|m3|abbr=on of gas in existing fields on the block to supply local fertiliser plants.

Vietnam

Premier entered Vietnam by acquiring a 75% interest in Block 12E/12W from Delek Energy Systems Ltd in 2004. Premier then agreed a farmout with Santos in April 2006 for a 37.5% interest. In June 2006, Premier announced it had successfully appraised the northern fault block of the existing Dua discovery, and announced it had discovered and tested oil and gas in Dua's southern fault block in October 2006.

Premier then drilled the Blackbird exploration which discovered oil and encountered over 70 metres of net pay. Premier is now proceeding with development studies on both discoveries.

Premier also holds a 45% interest in Block 07/03. The block is an exploration licence and seismic is planned for 2008, with first wells planned for 2009.

India

Premier has been awarded a 10% carried interest in the development of the Ratna field offshore Mumbai.

Philippines

Premier is planning to drill a well in Q1 2008 on the Monte Cristo prospect in Licence SC43. Premier will hold a 21.25% carried interest in the well.

North Sea

UK

Premier owns non-operated equity stakes in the Wytch Farm, Kyle, Scott, Telford, Fife, Fergus, Flora and Angus fields.

Norway

Premier expanded its North Sea operations by moving its entire North Sea Business to an office in Stavanger. Premier was awarded 5 licences in the 2005 APA licensing round, and a further 5 licences in the 2006 APA licensing round. Premier qualified as an operator in 2007.

In addition to its exploration licences, Premier (50% interest) is currently working with its partner Pertra to redevelop the abandoned Frøy oilfield. Premier is also working with BG to appraise the Bream field, originally discovered in 1971. An appraisal well on Bream is planned for Q2 2008.

West Africa

Mauritania

Premier holds an 8.12% interest in the Woodside operated Chinguetti fields which came onstream in February 2006. Premier's acreage also includes undeveloped discoveries including Tiof, Tevet, and Banda.

Congo

Premier holds a 58.5% interest in Block Marine IX.

ADR

In March 2006, Premier Oil was awarded four licences by the Government of the Saharawi Arab Democratic Republic ('SADR') in North West Africa. The four blocks are Daora, Haouza, Mahbes and Mijek. The SADR is a full member of the African Union and is classed as anon-self governing territory by the UN, reflecting the fact that a referendumon self-determination following decolonisation has not yet occurred. Thelicences will become effective when the sovereignty has been achieved.

trategic alliance

To consolidate its position as a leading independent production company in the south east Asian energy markets, Premier formed a strategic alliance with the Malaysian oil company Petronas and Amerada Hess in 1999, within which both Petronas and Amerada Hess owned a 25% stake in Premier.

Restructuring

In September 2002, Premier agreed to transfer its entire Myanmar Business to Petronas and part of the Indonesian West Natuna asset to Petronas and Amerada Hess. In consideration for these transfers, Petronas and Amerada Hess cancelled their combined 50% shareholding in Premier and provided $376 million in cash and debt repayment. Campaigners against the regime in Myanmar claimed Premier’s withdrawal as a victory but Premier maintained that the move related to wider commercial interests rather than political pressure. Ironically the move proved to be a victory not just for the Burmese activists but also for the Premier Oil shareholders who saw the share price rise by 6% with some analysts suggesting the firm would become a more attractive takeover target without its Burmese burden.

Premier today

Premier today is focused around four core Business areas: North Sea, West Africa, Middle East/Pakistan and Asia.

Premier's strategy has three parts:

1. To grow its production base from convert|35000|oilbbl|m3 of oil production per day to convert|50000|oilbbl|m3 of oil production per day in the medium term, all from existing discovered undeveloped resources in the ground.

2. Drill at least four "high-impact" wells per annum. The company defines "high-impact" as wells having the potential to add at least £1/share in the event of success. For 2008, Premier is planning high-impact wells in Vietnam and Congo.

3. To make acquisitions in areas the company knows well. This will be either acquisitions of additional equity in the projects it already owns, or projects within existing core areas.

References

* http://www.premier-oil.com
* http://www.corporatewatch.org/?lid=297
* http://news.bbc.co.uk/2/hi/business/3168478.stm
* http://news.bbc.co.uk/2/hi/business/2261781.stm


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