Premier Oil Plc, the U.K. explorer with projects in the North Sea, Asia and Africa, said 2007 profit fell 42 percent after a charge related to hedging oil prices.

Profit after tax slid to $39 million from $67.6 million a year earlier, the London-based company said today in an e-mailed statement. Operating profit rose 35 percent to $219.4 million, with revenue climbing 44 percent to $578.2 million.

``As oil prices go up, we have to make provisions in our income statement for hedging losses,'' Chief Executive Officer Simon Lockett said in a phone interview. ``These are non-cash hedges'' and ``they will reverse out over time.''

Premier plans to invest about $1 billion by 2011 to tap new fields and boost production to as much as 80,000 barrels of oil and gas a day in 2012, Lockett said. The company plans to focus on exploration in Vietnam and possibly expand in Pakistan, its main production region.

Premier reported about a $40 million charge in after-tax profit from hedging operations. The company had $332 million in cash resources and $223.8 million in non-drawn loans at the end of the year.

``We basically have got all the cash and cash flow to be able to cover'' the production expansion, Lockett said. ``We've got all the people in place.''

The company pumped about 40,000 barrels of oil equivalent a day as of February, up from an average 35,700 barrels a day produced last year, Premier said. The company expects output to reach 50,000 barrels a day by the end of 2010.

The explorer increased reserves by 39 percent to 212 million barrels of oil equivalent after it bought a stake in the Scott field on the U.K. continental shelf from Hess Corp. of the U.S., and an additional interest in a North Sumatra deposit. Total resources rose 28 percent to 369 million barrels at the end of last year, Premier said.

Premier shares yesterday rose 1.2 percent to 1,410 pence. The stock is up 7.6 percent this year.