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Quiet on here

lse:pmo

#21

Yup, I just can’t see the shale boys continuing to drill themselves into oblivion when their shareholders are banging on the door demanding returns.

Their share prices are being hurt just like Premier’s, which should focus the mind in terms of cash allocated to production growth vs shareholder returns.


#22

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#23

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#24

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#25

Premier always getting targeted when sentiment is poor, we’ve got a massive debt pile and the lower the oil price go the more difficult it is for us to chip away at it. That said, the entire E&P space is getting hammered, the smaller and more indebted you are (premier) the worse you’re impacted, but let’s not pretend it’s just premier under-performing.

Personally, I think the current share price (arguably accurately) reflects the concerns about the oil price, demand growth, trade wars, economic growth, increases in US inventory and that shale production growth continues at pace. More specifically, the concern for Premier, is that with an oil price starting in the $50’s we’d struggle to pay down the debt within 2020. A good portion of this years debt reduction is already locked with the hedging, but a declining oil price next year would certainly pose some challenges.

I’ve been very wrong about the oil market and premier so far, so my opinions generally don’t mean much, but with oil demand still rising (albeit probably slower than before) then it would only take a shale slowdown to balance this market. Will that happen, who knows, but if they don’t and inventories continue to build then their equity valuations will get obliterated just like Premier’s.


#26

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#27

Agreed, PMO is and always was a leverage play vs Oil. It will always move more wildly than WTI/Brent because of the cash flow impact the change in those prices have and the debt issue. So potentially bigger upside but also bigger downside.

Needless to say, with short interest increasing as the price decreases (another 0.2% added on Tuesday) it probably could well overshoot to the downside IMHO but that’s the way it goes. A fair bit of consolidation going on in the North Sea in the last years, so at some point someone might see it as a potential takeover target at the right price but until then…guess its pretty binary.