Premier Oil said today it planned to spend £538million developing the Solan oil field west of Shetland.
Solan and three fields within the Catcher area of the North Sea are expected to benefit from tax breaks unveiled in Wednesday’s Budget, boosting Premier’s already healthy coffers and standing it in good stead to take advantage of acquisition and exploration opportunities.
Premier chief executive Simon Lockett hailed Mr Osborne’s oil and gas package, adding: “Big thumbs up from us. I couldn’t have wished for a better result.”
Mr Lockett was speaking after Premier, which has said it is on course to grow production by about 50% during 2012, reported a 40.4% rise in annual profits.
The pre-tax surplus for 2011 was £89.6million, up from £63.8million the year before, on sales up by 8.3% at £523.6million.
Premier highlighted record after-tax profits of £108.4million, up 32% on a year earlier and ahead of the £104.5million forecast by analysts.
It said it had cash and undrawn bank facilities of around £886million in early 2012, giving it the firepower to make acquisitions and explore for oil in new areas.
Mr Lockett added: “Our exploration and acquisition teams are focused on accessing further profitable growth opportunities.
“We are in our strongest ever financial and operational position to take advantage of such opportunities as they emerge.”
The company last year made a £221million swoop to buy smaller North Sea rival EnCore Oil.
Premier is concentrating on growing its position by making acquisitions in its core production areas in the North Sea as well as Indonesia and Vietnam.
Mr Lockett said Kenya was an important future area for the firm, which is also looking to take part – in partnership with Vietnamese oil firm Petrovietnam – in the upcoming licensing round in Iraq.
Premier reiterated its average production target of between 60,000 barrels of oil equivalent per day (boepd) and 65,000 boepd for 2012, 50% higher than in 2011, as new projects come on stream in the North Sea.