Premier Oil rallies on Jefferies upgrade to 'buy'

Premier Oil rallied after Jefferies upgraded the stock to ‘buy’ from ‘hold’ and raised the price target to 185p from 170p, on the basis of “continued operational delivery in 2H15”.

It said Premier’s trading update, while maintaining existing full-year 2015 production guidance of 55,000 barrels of oil equivalent per day, leads it to believe that guidance may be too conservative.

Additionally, it said the timing and costs of the Solan field coming to first oil seems to have stabilised and Pakistan assets have attracted an approach.

“Operational momentum seems to be building even while the stock has traded down since our initiation in May,” said Jefferies.

Jefferies raised its full-year 2015 production estimate to 60,000 boed from 56,7000, due to delivery being above its estimates so far in the year. Vietnam's Chim Sao field, the UK Huntington field and Pakistan were the three particular assets that outperformed its expectations.

“Increasing FY15 production also raises our estimates for 2016 onwards, contributing to our core NAV and price target increase to 185p.”

At 09:13, shares were up 4.2% at 145.40p.