EON SE LONDON (Reuters) - Premier Oil (>> Premier Oil PLC) could exceed its full-year production target after hitting record-high output levels last weekend after the British company produced more oil from some of its North Sea and Vietnamese fields, its chief executive told Reuters.
Premier, which along with rivals has slashed costs and boosted operating efficiency to weather weak oil prices, reached production levels of 78,000 barrels per day (bpd) last weekend, making it likely it will beat its 65,000-75,000 bpd full-year target.
"Cashflow is king at the moment," Premier Oil Chief Executive Tony Durrant said. "We had record production over the weekend at 78,000 barrels a day."
These levels will be topped up by its new Solan field in the North Sea, which started flowing oil on April 12 and will reach levels of 20,000-25,000 bpd in the third quarter.
Shares in Premier, which rose 7 at the open, fell back to trade 3.5 percent lower at 66.8 pence by 0821 GMT. The European oil and gas company index <.SXEP> was down 0.9 percent in line with falling oil prices.
"A positive statement from Premier with better-than-expected production and continued cost savings, although we are still waiting for clarity on the funding position and negotiations with lenders around covenants," said David Round, analyst at BMO Capital Markets.
The oil company said it was in discussions with its lenders about amendments to its financial covenants and that a relaxation may be needed.
Premier, which completed the $120 million takeover of German utility E.ON's (>> E.ON SE) UK North Sea assets last month, said it would close E.ON's London office later this year and move all of its British operations to Aberdeen.
As many North Sea producers have assets up for sale, Durrant said he could see his company make further acquisitions, but not this year.
"There's plenty we could chase but our biggest obstacle at the moment is organisational," Durrant said, referring to the integration of E.ON staff that has doubled the size of Premier's British team.
The company is also planning to complete the divestment of its Pakistan operations in the third quarter, he added.
(editing by Jason Neely and Louise Heavens)
By Karolin Schaps
