Well Done



Well done to anyone who bought in the 50’s. The lowest I bought in was low 60’s (on top of my core holding). Lots to look forward too this year assuming the mafority of the large economies keep growing. When will see a £1.00 again .? Or more like £2 … That should wake up the resident troll


Good for you Diesel, I’m still sitting on the sidelines licking my wounds. Talk about not seeing that fall coming ! Should of listened to LastCall, but alas I didn’t.

Oh well, win some lose some and hopefully lessons learned and all that.

Lets hope 2019 continues moving in a positive direction. Atleast a few players are seeing the recent falls as a buying opportunity given Faroe and Ophir potential offers.


I agree Last Calls call was eerily prescient, I find it useful to listen to the technical guys, but ultimately I believe fundamentals will out if your patient enough to stick to your guns. Imho you have to follow a path/strategy & keep to it otherwise you’ll lose your way. ATB D


Well, the share price is struggling to get above the 50 day moving average currently ! I imagine if it gets through it, it might bring some technical buying interest ? I wonder if the shorts are defending their positions ?

Then there is the Trading Update tomorrow, surely it can’t have a more negative impact than the last one ?

Only time will tell…but atleast Brent back above $60 on the front end and its in contango for the rest of the forward curve so its over $63.50 by Dec-24.


It’d be interesting to see where last call is seeing the oil price. Personally I think it’ll now harden, but trump the tango man may have something up his sleeves. Hope GK doesn’t join this thread, unremitting gloom, although I guess I should be glad not to be in his head.


Well, the Trading Update seemed positive IMHO.

Glad to see they have managed to reduce debt towards the top end of their target.

Hopefully the oil price continues its recovery and the share price follows.


Yeah solid if unspectacular update. If I’m being picky forecast production for 2019 is lower than I thought. Headline 36% hedged at usd70 looks good, but again looks good but is based on lower production. Big positive Zama sounds like a beast !


Probably a case of under-promise and over-deliver on the current years production guidance. I don’t think the 75k is overly surprising when taking into account the asset sales and natural decline, but I do expect they’ll beat that guidance.


I agree, solid results, but far from spectacular. Good debt reduction, good hedging, but slightly disappointing forecast for this year. Pleased to see confirmation that are comfortably ahead of the covenant so this rules out any remaining risk of us going under due to the debt burden provided POO does not plummet further. Break even of $45 is a bit disappointing, but probably unsurprising given the headwind caused by the debt. The sooner they can renegotiate that the better because interest rates are likely to rise further this year.

It is good to see SP back to almost 80 but needs POO to steady above 60 for any further gains me thinks.



The debt reduction was better than expected, until you drill down into the nitty gritty (which I will expand on later), the rest was far from impressive.

This year’s projections are:
Opex up 20%.
Production down by 5500 barrels a day and that’s with Catcher producing 65k for the full twelve months, I’m sure the lost production was well worth $75m in cash receipts (to the creditors)!
Capex very similar to last year at $340m compared to $355m.

Back to the debt, I’m sure you remember this statement for last January’s TU:
“Net debt at the year-end was US$2.7 billion, reflecting positive free cashflow generation including disposals offset by the impact of the refinancing and non-cash foreign exchange movements on non-dollar denominated debt. Net debt reduction would have been even greater but for the phasing of certain liftings across the portfolio following lower production in Q4 which results in cash proceeds moving into 2018”

We all know about the bonds and the asset sales so that leaves $175m of debt paid down producing 80.5k per day with Brent averaging $73 through 2018.
Then we have:
“offset by the impact of the refinancing and non-cash foreign exchange movements on non-dollar denominated debt”, so since the end of 2017 what has happened to the dollar and therefore the non-dollar denominated debt you may ask?
The answer is the dollar has risen nicely meaning that portion of net debt has reduced when reporting in dollars.

To “accelerate” the debt reduction this year the company needs to pay down over $390m with less production and higher costs, how much family silver is left to sell?
They will not accelerate debt pay down from sales alone.

Finally Sealion = more debt, debt the company cannot afford.
Stop spending until the debt pile is under control.

Good luck tomorrow.


Personally I thought it was good soiid update that sets us well for 2019.

I’m not sure what people were expecting with the production guidance? I mentioned a while ago that I thought it’d come in at 75k-80k given the asset sales and natural decline of the older fields. Maybe the 75k is a bit low, but failing any disasters I think it’s there to be beaten.

Debt reduction was finally better than expected, maybe the final number was helped by the weaker sterling, but then every little helps.

Slightly confused, but ultimately pleased, with the $45 breakeven for 2019. That number must include the impact of the hedging program but I’m still struggling to see where it comes from with the numbers they’ve given us. Will clarify with investor relations when I get chance.

The high levels of debt are still a problem so I’d expect something big to accelerate the debt reduction process this year, but what will be will be anyone’s guess. Zama sale is my favourite and maybe a rights issue to pick up mol’s assets to accelerate the use of the eye watering $4.1bln of tax losses we’ve accumulated. From memory the covenants revert to 3xebitda at the end of Q1, which could be a little tight if oil prices weaken further.

If Zama does go, premiers longer term future is very much tied to falklands, but not a bad thing given the favourable tax regime. They certainly need to crack on with any decision, decline rates will be worse next year so we need something in the pipeline to replace that lost production.



Hi GK10

Good to hear the bear case too. PMO are not completely out of the woods and won’t be for a few years yet. But that is why they are valued at £700m. If it takes three or four years to get the debt down to under $1bn that would be acceptable. By then they should have a business worth at least twice the current market cap. And that would reflect a decrease in their overall EV. I would take that. 180p is still my medium term target and that still feels viable in the foreseeable future.



I would say the sooner the debt comes down the better !

That’s costing them in the region of 7-8% pa in interest if I remember rightly (last I saw was in the 2017 annual report at 7.3%). So at that it would be ~$168 pa based on $2.3bn.

GK saying Brent averaged $73 in 2018 is such an irrelevant statement on its own. Why don’t you factor in prior hedges that were in place to work out what PMO’s average Brent price and if I remember they were mainly hedged in the $50’s and maybe $60, so the real average Brent price for PMO was probably closer to $60-65 IMHO. Feel free to work it out as they had 22kbd hedged @ $60 for 2H 18.

So given they have hedged in around $70 for 2019 and current price is over $60, they should be reducing debt nearly as fast (minus reduced volumes) and financing costs will be ~$15-20m less.

Anyway, time will tell.


Don’t confuse break even with positive free cash flow.


GK, given how closely you track this baby, I assume you got some stock when it was in its 50”s ? Can’t believe you’d waste time here if you weren’t getting a financial return ? Or do you get another type of gain ?
Enjoy your weekend.


I’m only passing comments on the facts as reported by the company, if you see that as the bear case then you are entitled to that opinion.
The debt is due in 2021, with debt restructuring likely to start 12-18 months before then.
That only leaves 1 to 1 ½ years to get it back down to a sensible level giving the company the upper hand in those negotiations.
At $175m a year through oil and gas sales (ignoring the non-us debt) the company will be, once again, at the mercy of the creditors.

Lots of,
The majority of the company sales were on the prevailing market so to mention the $73 average is relevant with or without mentioning the hedges.
I’ll wait for the full year results for the average realised price, unless you want to give it a go?
Don’t forget the gas hedges, the weak pound and so on, definitely above my pay grade.

You have a good weekend too mate.


The realised oil price in H1 last year was only $61.6, if oil prices stay at even these levels we should comfortably beat that number with improved gas prices and the hedging that we’ve got in place. The mix of oil and gas has also changed, I would expect we’re close to 70% oil now after the completion of the Babbage sale and imminent completion of the sale of the assets in Pakistan. When we consider the assets in Pakistan were tax paying, low value BOE’s, that have been replaced with high value tax free barrels from Catcher, we can expect revenue numbers to rise significantly in H1 even with a similar production numbers to what we had last year, which of course will aid with the debt reduction process.

If Premier can produce $250m+ of free cash flow and sell Zama, 2019 could be a very good year for equity holders (usual oil price caveat applies).



Nice analysis Beatley, if poo stays where it is or strengthens (as I believe) on top of the usd70 hedges, 2019 should be good for pmo, we are already getting 10% more per barrel than last year. Given we know break even is usd45 a barrel & capex for 2019, it shouldn’t be difficult for investors to understand this business. In addition, what value do you put on Zara, I guess we will know soon.


Not sure on Zama Diesel, until the appraisal is completed on both sides of the licence it really is just a guess, but if I had to based on the information we’ve already got I’d say around $400m given a successful appraisal program. Not sure we’ll have it for that long anyway given this morning’s news, will create a new thread as I’m sure it’ll generate its own discussion.