A drop in pre-tax profits has not dampened enthusiasm for Premier Oil, whose shares are up nearly 3% after its annual results.
The company, which has oil and gas interests in the north sea, Asia and the middle east, said pre-tax profits had fallen from $277.6m to $79.9m. But - partly helped by a tax credit - after-tax profits climbed from $98.3m to $113m.
Its production rose by 21% helped by the successful acquisition of Oilexco in the north sea and Delek Energy in Vietnam, and it gave an upbeat outlook for 2010, pushing its shares 36p higher to £12.19. Richard Griffith at Evolution Securities
Premier has reported a strong set of operational and financial results for 2009. The 2012 production target of 75,000 barrel of oil equivalent a day remains on track and a new 12 well exploration plan in the UK North Sea and Asia is planned for 2010. The exploration plan takes on greater relevance as the current wave of developments reach completion.
Phil Corbett at RBS commented:
The profit and loss account was significantly impacted by treatment of Oilexco acquisition – stripping this out, we calculate an underlying pre-tax profit of $74.3m, compared to our expectation of $85.4m. Revenues were lower than our expectation, and exploration expense higher, although this was offset to a degree by lower net financials.
Post-tax operating cash flow is probably a better indicator of financial performance – Premier reported $327m compared to our $307m forecast, with lower cash interest and tax the main factors.
All in all, the operational update looks solid, and scene is set for a crucial period of exploration activity this year, particularly in the North Sea (Oates, second quarter 2010) and two Tuna prospects (Indonesia).
