Premier Oil released its FY 2013 results on 25 February 2014. Results were largely in line and there were no changes to operational outlook or guidance. However, the company is proposing a £75m.
Overall, results were in line. Revenue at $1.5bn was as announced in the company’s trading update. The operating profit at $352m was lower than our forecast of $420m mainly due to a higher exploration expense charge. However, a lower tax charge meant EPS at 44cps was higher than our forecast of 39cps. Net debt at $1.4bn was in line.
There were no changes to the operational review or outlook. FY 2013 average daily production was 58.2k with December average at 69k boepd. There was no further update on the company’s FY 2014 average daily production guidance of 58 to 63k boepd and it did not provide QTD production numbers. The company may provide further details during the conference call. There was no new information on planned projects. It expects Solan start-up later this year as planned, approval of Catcher development and progress with FEED studies for Sea Lion. There were no significant changes to the exploration programme. It plans to drill thirteen exploration wells in 2013 the most significant of which is the Luno II appraisal well (Q2 2014) and the wild cat Pear 1 well onshore Kenya (Q4 2014).
The results were results were more or less in line with forecasts. The announced £75m share buyback programme should please shareholders though the company did not give further details. We expect more detail during a presentation later today. We will provide further detail after that. In the meantime, we will be making no changes to our valuation. At current levels, it is trading at a 27% discount to our core NAV valuation. Given its lower risk profile relative to other E&P players, it is one of the most attractive picks in the sector in our view.
Merrion Stockbrokers Limited (registration no. 307878)
is a limited liability company whose registered office is at
Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.