Premier Oil to Write Down $300 Million of Assets

LONDON--U.K. oil explorer Premier Oil PLC (PMO.LN) said Tuesday it expects to take a write-down estimated at $300 million after tax in the second half of the year on some assets due to lower oil prices.

The U.K.-listed company said it has already budgeted for a cut in operating costs of at least 10% this year versus last year and is targeting significant further cost reductions due to weaker oil prices.

Smaller oil companies are more exposed to falling oil prices than integrated oil companies which can make money from other parts of their business. The price of Brent crude has more than halved since last summer.

Premier Chief Executive Tony Durrant said the company is in a strong position to weather a period of oil price weakness due to its long-term cash flow generation and a significant 2015 hedging program, in which it has sold forward around 40% of production that is sensitive to oil prices.

Total revenue for 2014 was $1.6 billion and capital spending for the full year 2014 was approximately $1 billion on development and $160 million on exploration.

The planned development spend for 2015 is anticipated to be 40% lower, at around $600 million, and the pretax exploration budget for 2015 is expected to be $220 million.

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