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Premier Oil - Oil recovery allows increased hedging

July 2016

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • PMO
  • Price:
  • 78.5p
Having endured a torrid period the shares have recovered to 78.5p as Premier has ticked two of the three conditions we felt were required for recovery; completion of the E.On acquisition (discussions remain ongoing to secure a financial covenant waiver) and first oil at Solan. An added bonus is the recovery in oil prices to around US$50 / barrel, mainly due to supply disruption in Canada and Nigeria.Its latest trading update on 11 May notes it has started exploiting this and has now hedged 5.53m barrels oil (including 0.77m from E.ON) at US$67 / barrel for this year and 1.5m barrels at almost US$46 / barrel for 2017. As a result, it should make decent profits as its costs are tracking 10-20% under budget year-to-date and costs are ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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