PREMIER OIL: $2.25 B PROJECT
Premier Oil has received final government approval to press ahead with the development of the Catcher field in the North Sea – a project with a total budget of $2.25bn that is expected to boost the UK's dwindling oil output by up to 6 per cent.
A total of $1.6bn of spending will be committed ahead of the start of oil production in 2017 drawn from across three oil deposits that have each attracted small field tax allowances to incentivise development of the project.
The development will consist of 14 oil-producing subsea wells and eight further water-injecting wells designed to boost production that is expected to peak at 50,000 barrels of oil a day.
Michael Fallon, energy minister, welcomed the go-ahead for the project which is expected to support up to 1,000 jobs during its construction phase. "The project represents over £1bn of investment and almost all of the subsea expertise and equipment needed for this development is being supplied by British companies right across the country," he said.
Premier Oil acquired its initial interest in the Catcher field following its takeover of Oilexco in 2009. Oil was discovered a year later, and in 2012 Premier Oil extended its interest through the takeover of Encore in a deal that left it with a 50 per cent ownership of the field.
Further dealmaking among original backers of the Catcher field has left Cairn Energy holding a 30 per cent stake in the project with MOL, the Hungarian oil group, owning a residual 20 per cent stake.
Simon Lockett, chief executive of Premier Oil, said: "Once on-stream this project, which has been facilitated by the government's small field allowances, will underpin our growing cash flows."
The company, which also has production assets in Indonesia, Pakistan and Vietnam, has pointed to the anticipated uplift in revenues from its North Sea projects as a key component in its attempts to finance the development of the Sea Lion oil discovery off the Falkland Islands.
Premier is planning to sell down part of its interest in the Sea Lion project to a larger oil company after acquiring a majority stake from Rockhopper Exploration in 2012 for $231m.
Though Mr Lockett has led the supervision of the Catcher project through to final government sanction, he will not be in charge of field development. In February the company abruptly announced he would be stepping down this year after serving as chief executive since 2005.
In April, fellow FTSE 250 oil explorer Ophir Energy confirmed it had withdrawn a merger proposal put to Premier Oil in the wake of its announcement that Mr Lockett would be departing.
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