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Premier Oil takes a pre-emptive hit

Premier Oil has taken a substantial fair value write-down, while paring back wage costs and capital investment. But the company looks reasonably well insulated against the current slump in crude oil prices.
January 22, 2015

What's new

â–  $300m non-cash impairment on oil assets

â–  Record production revealed for 2014

â–  2015 development spending cut by 40 per cent

IC TIP: Hold at 148p

Premier Oil (PMO) said it would take a $300m (£198m) fair value write-down on its assets and has asked North Sea contractors to take a 10 per cent pay cut in response to Brent crude's downward path. With one eye on the oil price, Premier has put the lid on any near-term discretionary drilling, but is still moving ahead with plans to drill eight wells this year. Overall, planned development spending for 2015 is expected to be 40 per cent down on last year. Management also said that a share buyback programme was to be postponed, pending a recovery in the oil price.

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