Premier shuffling its deck

The company is still centred around the North Sea project Catcher, which dominated earnings as operating profit climbed 77 per cent to $327.5m on the prior year, while free cash flow more than doubled to $182m. This was handed straight to lenders, taking the net debt figure down $500m from the same point last year to $2.15bn. 

Alongside the interim results, Premier announced it had taken on a 60 per cent stake in a new exploration property in Alaska through a $23m farm-in deal and launched a formal sale process for its 25 per cent of the Zama field in Mexico. There’s also a plan to sell off around 20 per cent of the 60-per-cent-owned Sea Lion project near the Falkland Islands, for which Premier is also looking for export credit agency financing. This is a fair bit to juggle but Premier has kept costs down and revenue stable during a period when realised oil prices were supported through the hedging programme. 

Finance director Richard Rose said it seemed like the right time to sell the “small” Zama interest after appraisal. If that project goes, the company could flip its attention to BP's 1990s discovery in Alaska, which contains an estimated gross 1bn barrels of oil in place. Mr Rose said the $23m spend would land Premier with a cheap project if it proves commercial and if not has limited downside. 

Consensus forecasts compiled by Bloomberg see full-year cash profit at $1.1bn and EPS at 18.1¢, falling to $981m and 14.7¢ in FY2020.