More on Premier Oil
Premier Oil: 2005 results
Premier Oil reported that post tax profits for the year to December 2005 rose 75% to $38.6m.
The growth was largely due to better prices. Production reached 33,300 boepd, which the company said was ahead of budget, but still below the 34,700 boepd level achieved in 2005.
The company said declining production in its ageing UK fields was partly offset by increased production in Indonesia and Pakistan. The company has been expanding its exploration activities and several new fields are expected to come into production in the medium term, boosting production to 50,000 boepd.
Premier said the Chinguetti field in Mauritania was successfully brought on stream in February 2006 and is expected to produce 5,700 boepd net to Premier by the end of 2006.
The outlook for the oil and gas prices in the medium term is firm; the only question is the ability of the producers to pump enough to meet demand. Although the company’s proven and probable reserves have declined slightly (to 164 mmboe from 177 mmboe last year) the total reserve position (including discoveries not yet booked pending commercialisation) has moved up to 232 mmboe from 210 mmboe last year.
The company seems confident of boosting medium term production to the 50,000 boepd level and overall prospects look bright.
The only drawback is the mix of the company’s production which is weighted towards gas- and gas prices have (in general) lagged oil prices, which may mean that the company’s earnings may lag some of its peers. However, this may be compensated increases in production volumes.
The share trades at 884p, on a prospective PE (2006 earnings) of 14.2x, no dividends are expected.
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