There was both promise and provisos in first-half results from Premier Oil (PMO). Better than expected production might boost forecasts for the full year, but the report also cast doubt over whether the first oil from the offshore Solan project west of the Shetlands will flow in the next quarter, as previously expected. With autumn now looming, production could conceivably be pushed back to the second quarter of 2015.
Nevertheless, new output coming onstream from projects in Vietnam and the UK resulted in an average first-half flow rate of 64,900 barrels of oil per day (boepd). That's 11 per cent ahead of the 2013 half year and firmly ahead of expectations. Unfortunately, this was offset by a substantial rise in asset impairments, which cut Premier's operating profit to $92m (£55.4), from $255m in 2013.
Near-term share price catalysts, apart from first oil at Solan, are the front-end engineering work for the Sea Lion development in the Falklands, and exploration wells in Kenya (Badada) and Norway (Myrhauk). Further down the track, oil flows from the North Sea Catcher project are expected by mid 2017. But none of this comes cheap: net debt crept up by 16 per cent over the six months to $1.7bn. However, the driller's cash position is being bolstered by a successful non-core asset disposal programme.
A $122m tax credit boosted the bottom line in the first half. Broker Goodbody Securities expects full-year adjusted EPS of 63.2¢, falling away to 60¢ in 2015.
| PREMIER OIL (PMO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 340p | MARKET VALUE: | £1.8bn | |
| TOUCH: | 339-341p | 12-MONTH HIGH: | 374p | LOW: 268 |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 430¢* | NET DEBT: | 75% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 758 | 215 | 30.5 | nil |
| 2014 | 885 | 50.4 | 32.8 | nil |
| % change | +17 | -77 | +8 | - |
Ex-div:- Payment:- £1 = $1.66 *Includes intangible assets of $994m, or 191¢ a share | ||||
