More on Burren Energy
Burren Energy: H1 2006 trading statement
Burren Energy reported a 17% increase in working interest production (to 33,900 bopd) for the half year to June 2006. The company has experienced a 40% increase in its weighted average realised oil price ($60.90 for the half year).
This should translate to double digit turnover and profit growth, for the half year, in keeping with trends seen before.
First half average production has reached 57,000 bopd, 49% above last year, although this is expected to drop slightly to in the second half of the year.
The company has reported some success in its exploration programme with two well yielding positive results. A further 15 exploration well are planned for the second half of the year.
Production levels are running somewhat higher than previous years and the company looks set for yet another year of spectacular results. While most of the sector has done well, benefiting from high prices, the smaller companies have found it much easier to expand production and have thus outperformed the sector by a large margin. Burren has been one of the best performing stocks in the sector and looks unlikely to be unseated from this position.
The principal risk to earnings is political. Its primary production fields are in Turkmenistan and Congo (Brazzaville), although the Congo fields are not operated by Burren. It has recently acquired exploratory acreage in Yemen, Oman and Egypt (Yemen and Oman being subject to Parliamentary ratification). Political upheaval in these areas could disrupt production.
The share trades at 828.5p, on a prospective PE (2007 earnings) of 7.6x, at the low end of the sector range, but reasonably valued given the higher level of risk than some of its peers. The yield is a poor 1.5%.
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