The market is responding positively to an update from Premier Oil (PMO) which reveals record production, a currency tailwind and good cost control.

Importantly, the company says it should begin to generate free cash flow from later this year.

The shares advance 4.5% to 71.9p with the announcement arguably signalling the benefits of having a numbers man, former finance director Tony Durrant, at the helm.

Output recently hit its highest ever level of 80,000 barrels of oil equivalent per day (boepd) and averaged 61,000 boepd in the first six months of the year.

It is expected to be at the upper end of previous guidance of 65,000 to 70,000 boepd for the full year.

Net debt still stands at an eye watering $2.6 billion but crucially has stabilised and is flat on the level at the end of the first quarter.

Negotiations with lenders are ongoing with covenants deferred until these discussions are finalised.

Operating costs were 14% below budget, at $16 per barrel of oil equivalent (boe) compared with previous full-year guidance of $17 per boe.

If exchange rates remain at their current levels Premier expects to see costs come down further with more than half of its remaining 2016 opex and capex denominated in sterling.

The company has successfully scaled back spending on its next big project, the Catcher field in the North Sea, with capital expenditure now 20% lower than at the point it was sanctioned.

Issue Date: 12 Jul 2016