Premier Oil seeks 100m boe in sales deals

Premier Oil seeks 100m boe in sales deals

SINGAPORE (Dow Jones): Premier Oil PLC hopes to negotiate sales contracts for 100 million barrels of oil equivalent in unbooked reserves by the end of this year, Charles Jamieson, Premier Oil's chief executive told Dow Jones Newswires late Tuesday.

Among those contracts may be a second sales deal for Premier Oil's gas discoveries in Block A of Indonesia's Natuna Sea.

Premier is working with Pertamina to find an offtaker for that gas, Jamieson said, adding that any deal would likely be separate from Conoco Inc.'s in-principle agreement to sell gas to Malaysia from its Block B in the Natuna Sea.

In late February, Premier resolved a dispute with Natuna Sea partners Conoco and Gulf Indonesia Resources Ltd., over Conoco's plans to pipe its Natuna gas to the Duyong platform, operated by Malaysia's Petroliam Nasional Bhd.

A final agreement between Conoco and Petronas is expected shortly, industry sources say.

Premier Oil has revised upward its reserves estimates for Block A, sources say, but Jamieson declined to disclose the new figure.

Premier Oil estimated Block A proven and probable gas reserves at 650 billion cubic feet, when it acquired the block from Chevron Corp. in 1996. In addition to the Anoa oil and gas field, Premier has since made gas discoveries in the Naga, Iguana and Gajah Baru fields.

Premier Oil no longer expects to "bulk up" to a US$2 billion company through asset injections from parent companies Petronas and Amerada Hess Corp., Jamieson said.

Premier Oil conducted a review of possible asset transfers following the two companies' 1999 acquisition of a 25 percent stake each in Premier Oil.

Premier Oil's fixed assets amounted to 692.5 million pounds (US$478 million) as of end 2000, or just over US$1 billion.

Jamieson didn't reveal what steps Premier Oil would take, but said the company would be "proactive" in "closing the value gap" between shareholders' expectations and the current share price, of 0.1725 pounds per share.

He didn't rule out future acquisitions or sales.

Premier Oil's net profit in 2000 was 6.1 million pounds, up from losses of 27.7 million in 1999, according to the company's preliminary results issued Monday.

In 2001, Premier estimates it will produce 50,000 boe/d, excluding take-or-pay volumes from Myanmar, up from 27,300 boe/d in 2000. Around 76 percent of its 2000 production was oil, with the remainder gas.

Some increase will come from Premier Oil's 28 percent stake in the West Natuna gas project, which will reach initial contracted volumes of 325 million standard cubic feet a day by July.