(Sharecast News) - Analysts at Canaccord Genuity cut their target price on independent upstream oil and gas company Premier Oil from 55.0p to 20.0p on Monday, stating it had identified some "valuation sensitivities" following its recent restructuring.
Canaccord said Premier's first-half results were overshadowed by the balance sheet restructuring update, and in particular its plans to raise $530.0m equity - $300.0m more than previously expected.
Looking at valuation sensitivities related to the equity raise pricing and commodity price assumptions, Canaccord said it thinks that a long term Brent expectation of more than $55.0 per barrel and an equity raise around current trading levels would provide a strong investment case but stated it was "currently more cautious" and assuming just $50.0 per barrel.
"For now we reset our target price at 20p based on our risked net present value core production and development valuation and we maintain our 'hold' rating," said Canaccord.
6 Oct 2020 08:02
UPDATE 5-Chrysaor to take over Premier Oil, creating UK North Sea's biggest producer
* Merger will create biggest UK N. Sea oil, gas producer* Premier had $1.9 bln in net debt* Reverse takeover would retain Premier's London listing* Premier shareholders expected to own under 6% of new group* FACTBOX on North Sea oil's changing owners...
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