Half-year results from Premier Oil (PMO) opened with a series of short statements from chief executive Tony Durrant. Lower oil prices, he says, have been addressed by "a step change in production levels and a leaner operating cost base", while an expanded portfolio and hike in production guidance "will drive free cash flow generation" in 2016.
Given the scale and urgency of Premier's imminent debt restructuring, it's reassuring that Mr Durrant and his team have distilled the firm's operations and purpose into such clear terms. But worryingly, investors were again denied firmer details on the re-financing of $2.63bn (£2bn) in net borrowings, down only marginally on the first quarter mark, save that the group has made "substantial progress with [the] lending group on the principal terms".
At the end of this month, Premier must again open its books to covenant stress tests which require net debt to not exceed profits by 4.75 times. Given that measurement was waived at the end of June, Premier will be hoping that a hike in top-end average annual production to 73,000 barrels a day, together with favourable currency impacts on sterling-denominated debt and capital expenditure will help lenders' optimism.
Prior to these results, analysts at JPMorgan Cazenove were forecasting a full-year pre-tax loss of $64m, giving a loss per share of 5¢, against losses of $830m and $2.09 in 2015.
PREMIER OIL (PMO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 78p | MARKET VALUE: | £397m | |
| TOUCH: | 77.5-78p | 12-MONTH HIGH: | 115p | LOW: 19p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 167¢* | NET DEBT: | 308% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 577 | -214.6 | -73.4 | nil |
| 2016 | 394 | 110 | 33.9 | nil |
| % change | -32 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of $1.17bn, or 229¢ a share £1 = $1.31 | ||||
