lots_of_sense
22 Aug 2019
Quiet on here Perhaps the shorts are running for some cover today ! Twice the normal volume and a decent price rise leading technicals to be also on the positive side for a change.
Beatley
22 Aug 2019
Quiet on here Webcast during the Q&A session has abruptly ended but the guys at Premier are sounding very bullish after a good set of results. Cost to first oil for Sea-Lion has increased from $1.5bln to $1.8bln, which probably goes some way to explain the Zama sale. No real mention about shareholders or why we’re one of the most shorted companies on the LSE, I doubt the share price is simply going to respond because they say everything’s going well.
lots_of_sense
22 Aug 2019
Quiet on here So a divestment of Zama and reduction of exposure to Sea Lion on the cards. I guess it makes sense as a decent reduction in debt would be good IMHO. Ok, lose some future growth potential but perhaps tricky to finance anyway given current debt levels. It would be good to get the debt to a more reasonable level whilst also reducing the financing costs currently being paid out so increasing cash flow. Good to see Catcher should also see an upgrade of reserves as well. Otherwise, all ticking along as well as could be expected.
Beatley
19 Aug 2019
Quiet on here Looks like Bloomberg Intelligence have missed the impact of the unitisation agreement, Zama should end up being around 20k net to Premier if we take it through to production. Tend to feel that we’re somewhat of a zombie company at these oil prices, not low enough (thankfully) to cause any major concerns with covenants but then not high enough to deliver any shareholder value, we’re simply burning through the reserves to pay the creditors back. H1 results this week, will good to get a proper update and hopefully some challenging questions in the Q&A session about where Premier go from here.
lots_of_sense
16 Aug 2019
Quiet on here Yes, deathly quiet…and with another 1% short interest being declared this week (~8.3m shares) given average daily volume is ~10m shares that’s potentially ~20% of the volume being short sales. Definitely a healthy short interest being built up now standing at 5.42% with all 4 known participants adding. So not surprising the share price is falling to new lows this year with this backdrop even if oil hasn’t. However, some Bloomberg Research to share from the other day. (Bloomberg Intelligence) – THESIS: Premier Oil is delivering operational performance and deleveraging ahead of expectations, and we see rising organic free cash flow – backstopped by Catcher, its flagship U.K. North Sea project – to extend through 2H. Catcher has achieved plateau volume above vessel-nameplate capacity, and is exhibiting exceptional production efficiency of 99%. We look for year-end net debt of about $2 billion, achieving 2x annual Ebitda, representing a significant milestone for the company. Approval in 2020 for Premier’s next-growth stage, Zama, suggests first oil in 2022-23, with capacity of more than 150 kboepd (38 kboepd net). (08/14/19) • 1H Production Averaged 84.1 Kboepd, Above High-End of 2019 Average-Production Guidance of 75-80 Kboepd • BI Scenario Sees 2019 Ebitda at $1.06 Billion, Compares With Consensus of $1.05 Billion • Sharply Improving Balance Sheet With 1H Net Debt at $2.33 Billion; Deleveraging to Continue to $2 Billion by Year-End • 2019 Capex of $340 Million Unchanged Premier’s pre-reported 1H average production of 84,100 boepd places the company well on track to meet or exceed the top end of its full-year guidance of 75,000-80,000 boepd, in our view. It also suggests potential for a guidance upgrade at 1H results. Performance continues to be led by Catcher (50% interest) in the U.K. North Sea, which is exhibiting unparalleled operating efficiency at 99% and reservoir performance in excess of vessel-design capacity, which has also facilitated lower operating-cost guidance of $12/boe (from $13). With free-cash flow extending through 2H, net-debt reduction is also on pace to meet or exceed guidance this year, and could be at-or-below the $2 billion milestone by year-end, equating to an impressive leverage ratio of about 2x Ebitda. (08/14/19)
gk10
13 Aug 2019
3 weeks ago Cocka, Are you still around sweet cheeks? When’s this £2 you promised coming? Fool.
Emerald_Carrots
31 Jul 2019
Oil price. The EIA report today @ 2:30 will be VERY interesting Woops! Make that 3:30 our time, not 2:30.
Emerald_Carrots
31 Jul 2019
Oil price. The EIA report today @ 2:30 will be VERY interesting The API report last night was I think a draw of about 6m, expected about 2. Last weeks high draws reported on both API and EIA were put down to the hurricane the prev week. If the EIA report later is a big draw then the hurricane theory will be out thw window and brent on it’s way to $70. All IMHO.
Beatley
27 Jul 2019
Quiet on here Dbatey, It was a good update, but we’ve still got too much debt and the market is concerned about lower prices ahead so no real market reaction. The IEA and OPEC are both predicting a significantly oversupplied oil market in 2020 so you have to ask, why would anyone buy an over indebted oil company?! I calculate at $50 oil for all of 2020 we’d be cash flow neutral (assuming similar CAPEX/ABEX/G&A etc) and that we’d be in breach of covenants…again. Unfortunately we know how that one ended for us shareholders last time. Maybe that’s why we’re once again one of the most shorted companies on the entire LSE?! I’m looking at H1 shale company results to give an indication if they’re listening to the market and will slow their rate of growth, which would have a material impact on S&D balances for next year. Surprising to me, analyst expect Pemex to take between 40%-50% of Zama following completion of the unitisation agreement. Although still an amazing find, it does dent my expectations on what our share would be fetch if sold. I would imagine somewhere closer to $400m would be a fair price based on that. Personally, I think Zama should be sold, but only is Sea-Lion is given the green light, which appears to be tied to securing the export financing. I’d also be looking into the merits of making a bid for Rockrose energy, they have some significant UK production, which would be hugely beneficial in terms of utilising our tax losses but would negatives in terms of adding decomp costs to the balance sheet. ATB.
dbatey22
19 Jul 2019
Quiet on here It is even quieter now… Good trading update this week and no comments. So thought I would add mine. A good first half, with production, revenue, and debt reduction ahead of forecast. Second half looking more tricky. They have not upgraded their production forecast despite being well above the top of the range in H1. This implies they are expecting a much lower production in H2, around 70k boepd if the forecast is correct. That implies a large 20% decline from H1, presumably a lot more maintenance downtime but there must be some significant field decline in there too (plus Pakistan sale of course). I would like to see a detailed forecast for H1 2020 and 2020 as a whole now. There is a lot of activity next year with FID on Zama, first gas on Tolmount, hopefully FID on Sea Lion as well, although I think that will be 2021 unless they monetise more assets. Zama sale is still a possibility. It should be worth a lot more now it is appraised and upgraded. If they did monetise it, how much of the proceeds would they keep for developing Sea Lion and how much would they use to pay off debt? And how would the market treat it? I doubt a sale of under £0.6bn would go down well because this is clearly a significant asset. In summary, more steady progress. Slowly lowering the risk profile from reduced debt is good. But with so much talk of recession and the potential for POO to plummet under that scenario. There are still some significant risks here. But I still feel comfortable holding and it is still my largest holding. DB
Beatley
04 Jul 2019
Some shale restraint........finally? The half year results and in particular the guidance for H2 will tell us a lot about the pressure the shale boys are under. I’m expecting the ones that can to start prioritise shareholder returns rather than production growth in what appears to be an over-supplied US market, EOG will be one to watch on that front. For the others, I would expect they’ll be forced to live within cash-flows that will significantly slow the rate of growth and help to balance the market. As for Premier, we’re in the best shape we’ve been for years. Debt under $2bln by year-end, Zama successfully appraised and upgraded, Tolmount progressing and we might finally be in a position to get Sea-Lion away. Zama is the interesting one, if we choose to sell and assuming we get around $400, we could be in a situation where 2020 year-end debt around $1.2-$1.3bln. It might be better to hold onto Zama, but if Sea-Lion is giving the green light then selling would undoubtedly remove any debt concerns and surely allow the share price to appreciate to a level where shareholders would finally have something to cheer about.
lots_of_sense
01 Jul 2019
Some shale restraint........finally? Indeed, in the end of the day lenders do not want to loan money to E&P companies that may not have the cash to pay it back. I think PMO would be somewhat higher if there wasn’t for a number of hedgies short it IMHO. Slight bounce on Zama, but that was short lived…atleast the technicals looking a bit better than they were. I think some decent short interests on Oil as well (so perhaps its just a sector thing) which probably has started to be a bit painful in the last 10 days. Would like to see it move up from here but think those shorts are more sticky than pure algo’s should/might be and that means we need some decent share buying to force an about turn. Only time will tell, but if oil is going up its becoming harder to reason why PMO isn’t.
Diesel
29 Jun 2019
Some shale restraint........finally? Good articles, let’s hope economic reality will visit the frackers, but their is something about the gungho American spirit that may mean this sector will defy gravity for longer than imaginable. I run my own business & if I ran it like the frackers the banks would have shut me down yonks ago, but so much more liquidity available to business in the US. In the UK I think the only real beneficiaries of QE & super low interest rates has been the construction/house building sector. It’s amazing to think that the ftse is barely higher than where it was 20 years ago, yet the Dow has soared. I digress, but shows the massive difference between us & our American cousins & their willingness to invest/take risks.
Beatley
29 Jun 2019
Some shale restraint........finally? Good article, absolutely crazy that they’re only just waking up to the fact they’ve constantly outspent cash from operations. I guess it isn’t a problem when you’ve got a growth story investors are buying into but now the penny has dropped about the lack of FCF you’ve got at least one executive calling for government controlled production restraint. You really couldn’t make it up. Copied the paragraph below. “Yet another called for “a conversation†about government regulation, perhaps mirroring the mandatory production cuts seen in Alberta this year. “We need to start a conversation between industry and government about bringing back pro-rationing (daily production allowables and monthly market factors) again. Nobody’s generating free cash flow,†the comment said.†I’ve coped a link to another good article about Pioneer Resources and the CEO, Scott Sheffield. Pioneer is great example of a shale player that will be forced to change. They’ve aggressively grown production but also constantly outspent cash flows. Now investors are worried about the lack of returns, they’re going to have to change track, which is evidenced in the article. I did chuckle reading their outlook for 2019, which basically said we’ll be cash flow positive if you don’t include this $300m of capex we’re not counting as capex To be fair, they’re a good company that can reduce capex, still grow production and return money to shareholders. Some of the mid-caps with high debts with the crappy rock will go bust with the bigger players cherry picking assets. The next 18 months will certainly be interesting, I’m expecting much slower growth from here, or maybe that’s hoping WSJ A Leader of America’s Fracking Boom Has Second Thoughts Pioneer Natural Resources, which once promised production to rival Libya, was part of a revolution that helped make the U.S. a global oil player. Now after years of overspending, the company is pulling back.
Diesel
28 Jun 2019
Some shale restraint........finally? Beatley, oil price.com is worth an occasional scan. The reason I mention it is there is an article by one of the shale founders, saying what an unmitigated disaster the shale sector has become. More bankruptcies expected. Trouble as we know it has also knocked traditional e&p in its wake. At some point surely capitalism will takecare if the zombie frackers.
