Premier Oil's decision to defy British government demands and stay in military-run Burma has paid off. The company yesterday reported its first profits in three years.
Chief executive Charles Jamieson claimed the political climate in Burma was improving. He expressed "cautious optimism" that the future of the country would reduce pressure on Premier.
Production started from Premier's Yetagun gas project in Burma last May and it is now Premier's largest asset. Gas is moving from Burma by pipeline to Thailand.
Pre-tax profits on ordinary activities bounced to £17m in the year to December 31, compared with a £16.7m loss last time. Turnover rose from £89.5m to £115.7m.
Profits would have been higher if Premier had not been forced to put in place an oil price hedge at $19.54 per barrel when the average price over 2000 was $28.39.
The hedge was imposed by Amerada Hess and Petronas, its two major shareholders in return for an investment of £136m in November 1999.
Premier has also left nearly £12m of extra revenues out of its immediate turnover on the grounds they are part of a take-or-pay contract and therefore must be treated as debt for the time being.
Like other oil companies, Premier has increasingly switched its attention to gas and concentrated on south-east Asia. Its other major asset is in Indonesia where Premier has just brought on stream its West Natuna gas scheme six months ahead of schedule.
Mr Jamieson said the commercialisation of its Asian gas business, successful exploration work and a growing base of reserves put Premier in a strong position for the future.
Progress was also being made in talks with Amerada Hess and Petronas about in creasing shareholder value. These two companies hold 50% of Premier and effectively rule out any outside bid for it. This has held back the price of the company.
Recent speculation that US-based Amerada might sell down or out its 25% stake sent the share price up from 12p to 20p. It has since dropped back and ended the day down 0.75p at 17.75p. Mr Jamieson said various options were being looked at and he expected a decision before the end of the year.
Analysts said the Premier results were encouraging but they remained sceptical about talk of a corporate shake-up.
