Canaccord cuts target price on 'optimistic' Premier

Analysts at Canaccord Genuity lowered their target price on British oil and gas outfit Premier Oil on Friday, noting the firm's current projections may be "a little optimistic" given the recent oil price weakness.

With Premier's revised guidance of 80,000 barrels of oil per day, down from its previous 80,000 to 85,000 estimate as a result of "some unplanned and extended downtime" at certain UK producing assets, the Canadian broker saw fit to lower its target price on the firm from 200p to 190p.

Nevertheless, Canaccord also pointed out that: "We understand these are now back on and current production rates are 85-90 kboed, with up to 95 kboed achieved on individual days."

The Canadian broker also highlighted a continued "strong performance" from Premier's Catcher project, with contracted oil production rates anticipated to increase from 60,000 barrels per day to 66,000, demonstrating its "good subsurface and facilities performance".

"FY18 guidance on operating costs remains $17-18/boe, and total capex is now expected to be $365m (down from $380m)," noted Canaccord.

Canaccord also said that it was "no secret" that the company has been looking to bolster its UK presence to allow for a more beneficial use of its UK tax losses, but added that there had been no further news on this.

Despite this, Canaccord reiterated its 'outperform' rating on the stock, but said the recent oil price weakness may suggest that pricing levels were "a little optimistic".