More on Premier Oil
Premier Oil: H1 2006 trading update
Premier Oil reported that it had achieved a 100% exploration success record from three exploration wells drilled in Indonesia. The company’s first well drilled in Vietnam has also struck oil.
The company says it is on target to deliver four high impact wells during 2006 and has acquired a 16.67% stake in the North Sumatra Block PSC in Indonesia.
The company does not disclose figures for output nor does it make any comment on prices realised but given the state of the oil market the company should have no difficulty meeting market expectations. The question is, is it likely to exceed them?
The successes in the exploration programme are positive, but will contribute to growth only in the medium term. The company is expanding its drilling portfolio rapidly- it is currently conducting high impact exploration drilling in Vietnam, India and in the UK. Although the company expects much from this programme, the contribution, again, will be in the medium term.
The short term will benefit mostly from the acquisition in Indonesia and from the high price of oil. We have generally been bullish of the oil sector as a whole and the smaller players in particular.
Premier seems set to perform steadily, although the pace of growth may slow from the spectacular level seen in the recent past.
The share trades at 974.5p, on a prospective PE (2007 earnings) of 20.2x, at the top of the sector range, and despite the excellent track record, looking rather expensive. The company is not expected to pay a dividend.
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