Premier Oil's Profit After Tax Almost Doubles

Friday, 24th August 2018 11:42 - by Rajan Dhall

After announcing that Tolmount gas development has been sanctioned earlier this week the Co. have managed to nearly double its profit as higher oil prices help the sector. Highlights from the report: 

·     Profit after tax more than doubled to  (2017 1H: )

·     EBITDA of  (2017 1H: ), up 19 per cent

·     Cash flows from operations of  (2017 1H: )

·     Opex of /boe, 5 per cent below budget

·     Net debt reduced to US$2.65 billion (2017: US$2.72 billion)

·     Forecast full year net debt reduction of  to  with covenant leverage ratio expected to fall to 2.5x by end Q1 2019, in line with previous guidance

Chief Executive Tony Durrant stated "Premier met its operational targets for the period. The Catcher Area is now at plateau production rates which, together with higher commodity prices, is driving free cash flow generation and net debt reduction. We have progressed our development projects while maintaining strict capital discipline. We can also look forward to a high-graded exploration and appraisal programme which has the potential to deliver very significant value for the business."

Looking at the weekly chart it clear to see the correlation with oil prices. But the last week we have had a bullish reversal. With this news behind the Co., we could test higher maybe even toward to the recent wave high of 135p in the coming weeks. The issue with the company is reducing the debt. With such an improvement to the bottom line, I think investors would like this to be quicker and that may be one disappointing factor. Nevertheless, the company is performing and let's see if investors mount an attack to take the share price to new wave highs.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.