Premier Oil provides its Interim Management Statement for the period 1 January to 19 May 2011. Premier's 2011 Half Year Results will be announced on Thursday 25 August 2011.

Highlights

Of the seven exploration and appraisal wells drilled year to date, five have successfully found hydrocarbons, including the important Burgman and Cá Rong Ðo discoveries Production averaged 37 kboepd to the end of April. As previously guided, forecast for 2011 is around 45 kboepd Short and medium term production targets of 75 and 100 kboepd remain unchanged and on track Key development projects continue to make good progress, with Chim Sáo and Gajah Baru now expecting first oil and gas in August and October 2011, and Huntington in early 2012 Good progress commercialising new projects, particularly Solan, Fyne and Rochelle in the UK, Pelikan and Naga in Indonesia and Dua in Vietnam A programme of 14 exploration and appraisal wells is planned for the remainder of 2011, with unrisked potential of around 300 mmboe, net to Premier Placement of US$350 million of bonds priced on 13 May at a weighted average cost of 5.5%. The bonds expire between 2018 and 2023 Strong finance position with cash and undrawn facilities of $1.5 billion

Simon Lockett, Chief Executive, commented,"We are pleased to be making good progress in our exploration activities, and our current and future development programmes. We remain on track to meet our aggressive growth targets in the short and medium term."

Production Production averaged 37 kboepd in the first four months of the year following maintenance related downtime on the Balmoral and Wytch Farm facilities in the UK, which are now resolved. Average production for the year is expected to be around 45 kboepd, in line with guidance. Premier's production target of 75 kboepd in 2012 from existing projects and mid-term target of 100 kboepd remains unchanged.

Gas demand from Singapore has remained strong. Block A continues to take a market share of around 42% against its contractual market share of 36.9%, with the Anoa field continuing to perform well.

Pakistan production levels were lower than expected due to longer than budgeted end user annual turn-around affecting sales from the Qadirpur field. This is now complete. The compression project at Zamzama is nearing completion.

In Mauritania, the Chinguetti field averaged around 615 boepd net to Premier. Natural decline continues to be lower than expected.

Development Projects

Vietnam Development drilling is progressing well at Chim Sao and first oil is now planned for August 2011, with production building up thereafter. The development concept for the Dua field, which will be tied back to Chim Sáo, continues to be refined. Front-End Engineering and Design (FEED) studies are complete.

Indonesia Development drilling was completed at Gajah Baru and good progress continues to be made on the compression platform ahead of first gas expected by 1 October 2011. Overall, the project was 82% complete as at the end of April.

Facility FEED is now complete for the Pelikan and Naga projects, which will follow Gajah Baru. Project sanctions are expected later this year.

EPCI facility tenders are underway on Block A Aceh, with first gas targeted for late 2013.

UK Development drilling has commenced at Huntington and the field is on track for first oil in early 2012. In the Rochelle area, a pre-unitisation agreement has been drawn up, which will allow Premier to participate in a combined Rochelle development at an equity of 15%.

A sale and purchase agreement in relation to the Solan field is expected to be signed shortly and project sanction anticipated before year-end.

Catcher development work is underway with the formal concept selection process commencing this quarter. Project sanction is targeted for mid 2012.

Norway The Frøy project was approved internally by Premier at the end of March. The Frøy operator has indicated that, due to a number of projects competing for its existing resources, it had decided not to proceed with the Frøy project at this time. Premier and the operator are jointly discussing commercial options to enable the project to move forward.

Bream will progress to project sanction once the arrival date of the preferred FPSO is confirmed.

Exploration

Premier has executed a successful exploration programme over the first half of 2011, notably with discoveries at Burgman in the UK and the CRD-2x appraisal well in Vietnam. A further 14 exploration wells are planned for the remainder of the year, targeting 300 mmboe of net unrisked resources.

Exploration and appraisal programme There are 14 wells currently drilling or planned for the remainder of 2011.

Indonesia Gajah Laut Utara-1 spudded on 11 May on the Tuna PSC with results expected mid-June. This will be followed by Belut Laut-1. On the Natuna A PSC, drilling of Anoa Deep is forecast for September, followed by Biawak Besar in November. Matang-1 drilling is forecast for an October spud on Block A Aceh in North Sumatra and the Benteng-1 well on the Buton block in South East Sulawesi is forecast for a July 2011 spud.

Vietnam The Jackfruit prospect on block 104-109/05 is planned to be drilled in the second half of 2011. The Cá Rong Ðo 2x well results announced last month are being evaluated to assess the requirement for further appraisal drilling in 2012

Norway Grosbeak spudded on 23 April and results are expected shortly. The Gardrofa well, adjacent to the Bream field, will be drilled in the third quarter.

UK Premier exercised its option to farm-in to the Fyne field by committing to drill the East Fyne appraisal well. A rig has been contracted to drill both this well and the Bluebell exploration well later in the year.

The UK 28/9 (Catcher) joint venture partnership plans to acquire new 3D data across the block in order to optimise the location of future exploration and appraisal wells, following on from the successful exploration drilling campaign that culminated in the Burgman discovery in March.

Pakistan On the Kadanwari field flow rates on the K-25 well were disappointing (4 mmscfd at 500 psi WHFP). However, early indications are that the K-27 well, which is currently being tested, will exceed expectations.

Kenya Two Production Sharing Contracts on blocks L10A and L10B, offshore Kenya, were signed on 16 May, in which Premier has a 20% and 25% interest, respectively. The joint venture plans to acquire 2D and 3D seismic data in late 2011.

Finance

Expected capital expenditures for 2011 have increased from US$700 million to around US$750 million as new exploration and development projects have been added to the portfolio.

The issuance of US$ bonds of US$350 million (priced last week) will bring Premier's total debt facilities to around US$2.2 billion. Net debt at 30 April 2011 was approximately US$460 million.

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