Premier Oil Announces 2020 Full Year Results

Source: 3/18/2021, Location: Asia

Corporate transaction highlights
- Proposed merger with Chrysaor to create Harbour Energy plc, a cash-generative London-listed oil and gas company of scale with a strong balance sheet and significant international growth opportunities

- Forecast net debt of Combined Group on completion of US$2.9 billion (previously US$3.2 billion), reflecting higher commodity prices and full take up of Harbour Energy shares by creditors

- Completion of Chrysaor merger expected 31 March 2021, with shares to be readmitted to trading on 1 April as Harbour Energy plc
- Shareholder and creditor approvals received, regulatory conditions satisfied and anti-trust clearances granted
- Court sanction hearing scheduled for 19 March 2021

Premier operational highlights
- 2020 production averaged 61.4 kboepd (2019: 78.4 kboepd); Premierís 2021 guidance of 61-66 kboepd reiterated (excludes Chrysaor assets)

- Tolmount: platform installed and first of the four development wells successfully completed. First gas on track for Q2 2021, adding 20-25 kboepd (net) once at plateau later in 2021

- Significant growth optionality retained
- Zama (Mexico): FEED completed, unitisation progressed; project sanction targeted end 2021
- Tuna (Indonesia): Fully funded appraisal of c. 100 mmboe (gross) field to start in Q2 2021
- Sea Lion (Falkland Islands) licence extension and farm down arrangements agreed
- Highly encouraging results from new 3D seismic data sets across Indonesia and Mexico exploration acreage

Premier financial highlights and outlook
- Operating cash flow of US$630 million (2019: US$1,080 million) with a net cash outflow of US$90 million; 2020 year-end net debt of US$2,078 million (2019: US$1,990 million)

- US$1,302 million loss after tax (2019: US$164 million profit after tax) driven by one-off non-cash charges, including US$817 million relating to the partial derecognition of Premierís UK ring fence tax losses and allowances which are expected to be re-recognised on completion of the Chrysaor merger

- 2020 operating costs (ex-lease costs) of US$12.2/boe and full year total capex (including decommissioning spend) of US$315 million, reflecting full year savings and deferrals of over US$250 million

- 2021 guidance of US$15/boe operating costs (ex-lease costs) is unchanged. 2021 total capex guidance is expected to be approximately US$300 million capex (previously US$275 million), reflecting phasing of some costs from 2020 and increased Balmoral Area decommissioning spend

- Premierís total gross debt of c. US$2.7 billion, which includes letters of credit and certain hedging liabilities, to be repaid and cancelled on completion of the merger with Chrysaor

Chrysaor 2020 highlights
Chrysaor has published on its website today its full year results for the year ending 31 December 2020 and has provided Premier with the following highlights:

- Production in 2020 of 173 kboepd (2019: 137 kboepd), in line with guidance, and underpinned by a full yearís contribution from the assets acquired from ConocoPhillips and exceptionally high uptime; 2021 production forecast of 140-155 kboepd unchanged

- Free cash flow after capex, tax and interest of US$562 million, underpinned by increased production, a strong hedging programme and capex deferrals

- EBITDAX of US$1,784 million (2019: US$1,692 million). Loss after tax of US$778 million (2019: US$218 million profit) reflecting one off non-cash impairment charges of US$1,055 million driven by weaker commodity prices and movements in foreign exchange rates compared to the outlook before the pandemic

- Chrysaorís operating costs (including net tariff costs) averaged US$11.5/boe; 2021 guidance of less than US$15/boe operating costs (including net tariff costs) unchanged

- 2020 total capex (including exploration and decommissioning) was US$718 million, approximately US$575 million lower than forecast at the outset of the year; 2021 capex guidance of US$750-850 million, including US$170 million for decommissioning (pre-tax relief), unchanged

- Significant hedging programme with 74% of 2021 oil volumes and 85% of 2021 gas volumes hedged at an average price of US$58/boe and 44 pence/therm, respectively

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