Premier shifting focus from oil to gas

Premier Oil yesterday outlined a new strategy to transform itself from a North Sea oil company to an Asian gas group, despite the economic turmoil in emerging markets. Charles Jamieson, chief executive, said that by the turn of the century his company would have 70 per cent of its production coming from gas rather than oil.

Currently Premier has 85 per cent of production in oil and 15 per cent in gas. Mr Jamieson dismissed worries about the economic strength of the area, saying this should not affect the kind of gas business Premier intended to concentrate on.

Alan Marshall, energy analyst at Robert Fleming, supported the new strategy, despite the uncertainty in South-East Asia. But other industry watchers were sceptical, and Premier's shares fell 3.5p on the day to 40.5p.

Mr Jamieson said much of the new focus towards Asia was already under way as Premier put increased resources into Indonesia, Burma and Pakistan. Last year Premier made four significant discoveries and took over as operator of the Anoa field in Indonesia. The exploration and production company also took over as operator of the Yetagun field in Burma and signed a strategic alliance with Petronas, the Malaysian state oil company.

Mr Jamieson unveiled the new gas focus after reporting a small but better than expected increase in pre-tax profits, from pounds 68.5m to pounds 71.1m in the 12 months to 31 December.

Turnover rose from pounds 138.8m to pounds 166.2m but the company was hit by lower oil prices, particularly in the last quarter of the year. To mitigate the effects of the current oil price of below $14 (pounds 8.50) per barrel, Premier has hedged 25 per cent of its production at $18 per barrel during the first half of the year.

Cash flow rose 45 per cent to pounds 90.5m and the dividend was hiked 10 per cent to 0.6p per share.