Premier Oil bumps up Zama field resource estimate

Premier Oil said on Thursday that it has "significantly" increased its resource estimate for the Zama field offshore Mexico.

The company revised its gross resource estimate of the Zama structure to between 670 and 970 million barrels of oil equivalent compared to 400 to 600mboe previously.

Chief executive officer Tony Durrant said: "We are delighted with the results of the latest Zama appraisal well which, together with the positive results from the earlier appraisal wells, has caused us to significantly upgrade our resource estimates of the Zama structure.

"Our focus now turns to selecting the optimal development for the field, ahead of taking a final investment decision next year."

Last month, Premier upped its production guidance for the year to between 75,000 and 80,000 barrels of oil equivalent per day from previous guidance of 75,000 boepd.

At 0940 BST, the shares were up 2.3% at 80.06p.

Following the update, Berenberg reiterated its view that Premier remains "significantly undervalued" at current levels.

The bank said it's rare for a company to emerge from financial distress with an asset of the quality of Zama.

"We conservatively estimate a breakeven price $30/bbl, which, given its size, makes Zama one of the most attractive offshore discoveries made recently," it said.