Not many companies posted a tax credit larger than their market capitalisation this results season, but then Premier Oil (PMO) has long been in a unique position. The $522m (£429m) offset, which pushed the debt-laden energy explorer to a $123m net earnings profit, was largely drawn from losses not previously recognised, although accounting changes to the treatment of decommissioning provisions and investment allowances also helped.
Support also appears to have arrived from Premier's financiers. A total of 87 per cent of lenders by value have agreed to the terms of a refinancing, meaning amendments to borrowing terms - which effectively kick retail bond and private lending maturities back to 2021 - are imminent.
An end to the saga has been long coming, and a glance at the cash flow statement demonstrates how timing (or a lack of it) has affected the Premier story over the past two years. While production increased by 24 per cent to 71,400 barrels a day last year, a post-hedge oil price of $52 meant that operating cash flow could only cover 64 per cent of capital expenditure totalling $678m. This outlay will fall heavily this year, as exploration costs fall and Catcher switches from a cash eater to a cash generator.
Market analysts expect pre-tax profits of $19.5m and zero EPS in 2017, moving to profits of $247m and 31.9¢ in 2018.
PREMIER OIL (PMO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 60p | MARKET VALUE: | £305m | |
| TOUCH: | 59.5-60p | 12-MONTH HIGH: | 100p | LOW: 38p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 3 | |
| NET ASSET VALUE: | 158¢* | NET DEBT: | $2.8bn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.40 | 360 | 47.9 | 5.0 |
| 2013 | 1.50 | 285 | 44.2 | 5.0 |
| 2014 | 1.63 | -363 | -43.3 | nil |
| 2015 | 1.07 | -830 | -210 | nil |
| 2016 | 0.98 | -391 | 25.7 | nil |
| % change | -8 | - | - | - |
Ex-div: na Payment: na £1=$1.22 *Includes intangible assets of $1.25bn, or 245¢ a share. | ||||
