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Premier Oil gushes higher on Peel Hunt initiation

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Premier Oil gushes higher on Peel Hunt initiation

Thu, 16 March 2017
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Premier Oil gushes higher on Peel Hunt initiation
Premier Oil Quote more

Price: 60.75

Chg: -0.75

Chg %: -1.22%

Date: 13:44

(ShareCast News) - Premier Oil gushed higher for the second day in a row on Thursday as Peel Hunt initiated coverage of the stock with a 'buy' rating.
On Wednesday, Premier shares surged after it said it had secured the final lock-up for its refinancing bid.

The brokerage said that with Premier now expected to complete its refinancing in the short term, the focus can shift to delivering value to shareholders through growth and debt reduction.

Peel said that securing extended maturities and covenants will enable Premier to invest in development-led growth while reducing net debt, with its modelling suggesting a reduction of 10% to $2.5bn by the end of 2020.

"The portfolio provides flexibility to outperform our forecasts and we see potential for a share price re-rating as rising production and falling opex are reflected in improved cash flows. We also flag near-term exploration upside."

Peel Hunt recognised that Premier remains highly geared and therefore the share price remains sensitive to further oil price weakness, however it set its target price at 90p, representing 40% upside to the current price.

At 1020 GMT, the shares were up 6% to 67.31p.