Premier Oil (PMO) has pulled its full-year dividend and taken an axe to capital budgets in response to the falling price of crude oil. The driller booked a loss of $248m (£160m) for 2014, against a profit of $352m in the previous year. The reversal is explained by $784m in impairments, the bulk of which were charged against North Sea assets located in the Balmoral, Huntington and Solan fields.
Sharply lower estimates on forward Brent crude prices have forced a rethink of the company's capital allocation. Premier now plans to reduce capital expenditure this year to $920m, from $1.2bn in 2014. Moreover, the driller intends to implement upwards of $600m in capital and operational savings over the next three years.
The crude slump could also throw up some potentially lucrative acquisition opportunities. With around $1.9bn in cash and undrawn loan facilities, Premier's chief executive,Tony Durrant, said the company had sufficient financial clout to snap up new assets in the North Sea this year. The immediate focus, however, will be on the 2015 drilling campaign in the Falklands, which gets under way shortly.
Goodbody anticipates adjusted EPS of 25.6¢ for 2015.
| PREMIER OIL (PMO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 171p | MARKET VALUE: | £872m | |
| TOUCH: | 170-171p | 12M HIGH / LOW: | 359p | 125p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 367¢* | NET DEBT: | 113% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 0.8 | 101.0 | 28.0 | nil |
| 2011 | 0.8 | 142.0 | 36.6 | nil |
| 2012 | 1.4 | 360.0 | 47.9 | 5.0 |
| 2013 | 1.5 | 285.4 | 44.2 | 5.0 |
| 2014 | 1.6 | -384.0 | -40.3 | nil |
| % change | +9 | - | - | - |
Ex-div: na Payment: na £1 = $1.55 *Includes intangible assets of $1.1bn, or 209¢ a share. | ||||
