Upbeat Premier Oil still troubles wary investors
A DECLARATION from debt-laden Premier Oil that it is well-placed to benefit from a recovering oil price failed to win over jittery shareholders today.
The exploration and production company has a £2 billion debt pile, but is also completing a major deal with BP to buy ageing oil and gasfields in the North Sea.
Its shares tumbled 70% in a week in March, driven by the perfect storm of debt worries and plunging oil prices caused by coronavirus and a price war between Russia and Saudi Arabia.
Despite the first-half slump in commodity prices, CEO Tony Durrant said today that “decisive action” to reduce expenditure meant that net debt remained steady.
Financial covenants have been waived through to the end of September and the company is forecasting it will generate cash in 2020 based on the current outlook for oil prices.
While Durrant said the completion of the BP acquisitions positioned Premier to benefit from a recovering oil price, shareholders were less sure as the company’s shares fell back 3% to 44p. They had been above 100p in February. Premier’s performance was not reflected on the wider London market, with investors setting aside their fears of a second virus wave to help the FTSE 100 rise 28.41 points to 6,208.16.
The improved risk appetite helped Rolls-Royce to top the blue-chip risers board, with a gain of 4%. BA owner International Airlines Group was up by a similar level.
Charter business Air Partner fell back 8% after it revealed that trading had returned to more normal levels in July, having benefited from demand for emergency freight flights and repatriation work in the first five months of its financial year. Shares, which soared from 17p to 100p between March and the start of July, were off 8p at 90p today.
Agriculture and engineering group
Carr’s cheered investors by revealing that its deferred dividend for the half year to the end of February will be paid in October.
It described its recent performance as resilient, with cash generation ahead of expectations. Shares rose 6% to 114.5p.
There was also encouragement from cake-maker Finsbury Food, with progressively improving sales up to June. The company expects a renewed focus from consumers on healthy, gluten-free and vegan products, and a return to growth of snacking on the move. Shares lifted 0.8p to 61p.