UPDATE 2-Premier Oil sees delay in meeting 2012 avg output target

Thu Aug 25, 2011 7:28am EDT

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By Anirban Sen

BANGALORE, Aug 25 (Reuters) - Premier Oil Plc expects a delay in meeting its daily average production target for 2012 due to financial difficulties faced by its partner in the Huntington project in the North Sea.

Shares of Premier Oil fell as much as 9 percent to a more than two-week low of 318.9 pence on the London Stock Exchange, making it the top loser on the FTSE mid-cap index on Thursday.

Sevan Marina ASA, which is scheduled to supply a production and storage vessel to Premier as part of the contract to develop the Huntington field, recently signed a $36.1 million bridging facility with its bondholders to meet its short-term working capital needs, Premier said.

"Our current estimate for arrival of that vessel is in the second half of 2012, so we'll hit 75,000 boepd (barrels of oil equivalent per day) towards the back-end of 2012 rather than for the full year," Chief Executive Simon Lockett told Reuters.

Premier, which owns assets in the North Sea, Congo, Indonesia, Vietnam and Pakistan, had previously set itself a production target of 75,000 boepd for 2012, a 66 percent jump from its 2011 output guidance.

Premier said it planned to drill up to 20 exploration and appraisal wells over the next 12 months, targeting about 300 million barrels of oil equivalent (mmboe).

The company also reiterated its full-year production outlook of 40,000-45,000 boepd. The company expects a year-end production run rate of 60,000 boepd.

Macquarie Research analyst Mark Wilson said investors were doubtful about whether Premier, which has encountered disappointing drilling results in Indonesia over the last two months, could meet its long-term production targets.

"Exploration results have been disappointing (in Indonesia), so people are not seeing a massive potential upside for the exploration," Wilson said.

Earlier on Thursday, Premier reported a huge drop in its first-half pretax profit at $32.5 million, compared with $111.6 million a year ago, hurt by exploration write-off costs of $80.6 million.

Analysts on average were expecting a pretax profit of $106.1 million, according to Thomson Reuters I/B/E/S.

First-half production averaged 36,900 boepd, down 21 percent from last year, as output was hurt by increased maintenance at some of its fields in the UK.

Separately, Salamander Energy , a smaller British oil explorer focused solely on South East Asia, swung to a first-half profit on higher production.

($1 = 0.610 British Pounds) (Reporting by Anirban Sen in Bangalore; Editing by Maju Samuel)

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