Premier Oil Plc (lon:pmo)
Premier Oil – Is Debt Overwhelming The Business?

Premier Oil Plc Financials

ItemCurrent PeriodPrevious Period
YearN/A N/A
Period12 Months12 Months
Revenue
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit
Adjusted Profit
Total Debt
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Commentary History
Premier Oil Plc Share Price
Grade:The Black Grade - Shares That I Think Could Collapse To Nothing Or Suffer A Massive Share Issue.
Title: Premier Oil – Is Debt Overwhelming The Business?
Company: PMO - Premier Oil Plc
Share Price Then: 25.7p
Author: Ian Smith
Date: Fri 21 Aug 2020
Comments: The company is about to come back to the shareholders for $530m, $230m to buy assets off BP and $300m to reduce the $1.9b debt

Prior to the COVID crash the company had a market cap of between £600m and £1b so this is a big fund raise, today’s price is 25p against 60p-120p for most of the last couple of years, so the issue price is going to be important and that is to be announced.

All the flowery words are wrapped around However, the Proposed Refinancing is outside of the Group's control and if the Proposed Refinancing did not complete by May 2021, the Group does not consider it will be able to repay its outstanding debt liabilities under its financing facilities.

Okay the refinancing does look likely, but that it is needed is a cause for concern, when you owe $2b you are in a sort of strong position. There is no way that you can pay it back in a hurry but at the same time the lenders may say we’ll take what we can get even though it means taking a loss.

The initial price for BP’s stake in the Andrews and Shearwater fields was $625m in Jan 2020, this has dropped to $210 + a possible $115m depending upon oil prices. The gross assets at 30 June 2019 and 2018 profits attributable to BP's interests in the Andrew Area were US$533 million and US$58 million respectively and the Shearwater Field were US$145 million and US$37 million respectively.

What is worrying to me is that this could just be about turnover and building a big company and not about a profitable company.

There is no hiding the seriousness of saying to the shareholder please give us $300m and we will just give it to someone else at least with the acquisitions funding there may be a profitable transaction.

For me the shares are not buyable as anything other than a trade because some people will be more optimistic than me.
Read Count/ID: 174/13171

Buy/No Buy In A Nutshell
NegativesDebt of $1.9bn, about to tap shareholders for another $535m.
PositivesOnce the share issue takes place it could be a tradeable share for a couple of years.
Initial Review Price21.8p
Last Review Price21.8p
Last Review Date21-Aug-2020
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