Premier Oil PLC’s Stock Price Lags BP plc, Tullow Oil plc, BHP Billiton plc And Royal Dutch Shell Plc After Results

Premier Oil PLC’s (LON:PMO) (LSE:PMO.L) stock price is behind the stock prices of BP plc (LON:BP) (LSE:BP.L), Tullow Oil plc (LON:TLW) (LSE:TLW.L), BHP Billiton plc (LON:BLT) (LSE:BLT.L) and Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L) in the last year

Premier Oil PLC
Premier Oil PLC

Premier Oil PLC’s (LON:PMO) (LSE:PMO.L) stock price has dropped 0.7% today after the release of 2016 results to investors. Premier Oil’s production for the year stood at 71.4 kboepd, which is a record figure and a 24% increase on the prior year. It also achieved high operating efficiency of 91%, with E.ON’s UK upstream portfolio outperforming. Premier Oil now expects payback to occur for its investment in H1 2017, which could please investors in my opinion.

Premier Oil’s cost base has been reset, with opex of $15.8/boe. Capex at its Catcher asset has been reduced by 29%, while the company’s 2P reserves and 2C resources have increased to 835 mmboe.

The company’s profit after tax of $122.6 million was an improvement on 2015’s loss after tax of $1.1 billion. However, it included a tax credit of $522 million. Premier Oil’s cash flows from operations were $431.4 million, with capex of $678.1 million significantly below budget. Net debt stands at $2.8 billion, which has seen a reduction since its peak in Q3 2016.

In a separate update, Premier Oil announced RCF, Term Loan, USPP and convertible bondholders have locked up to refinancing terms. The company’s total debt facilities have been preserved and their maturities have been extended to 2021 and beyond. Completion of refinancing is still expected by the end of May.

In the last year, Premier Oil’s stock price has gained 16%. However, that’s behind the share price gains of other oil stocks such as BP plc (LON:BP) (LSE:BP.L), Tullow Oil plc (LON:TLW) (LSE:TLW.L), BHP Billiton plc (LON:TLW) (LSE:TLW.L) and Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L). Tullow Oil’s shares are 20% higher, Shell’s stock price has gained 30%, BHP Billiton is 52% up and BP’s stock price is 28% higher than a year ago.

In my opinion, Premier Oil has investment appeal for the long run. Its financial performance may not be as strong as the likes of BHP Billiton, Tullow Oil, Shell and BP, but I think it has potential to perform relatively well. I’m optimistic about the prospects for oil due to the cut in supply from OPEC and I feel Premier Oil’s stock price could benefit in future.

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