LSE:PMO

Stock Analysis Report

Executive Summary

Premier Oil plc, an oil and gas company, engages in the exploration, production, and development of oil and gas properties primarily in the Falkland Islands, Indonesia, Pakistan, the United Kingdom, Vietnam, and internationally.

Rewards

Trading at 85.9% below its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of -39.3% per year for the next 3 years

Interest payments are not well covered by earnings

Shareholders have been diluted in the past year



Snowflake Analysis

Fair value with acceptable track record.


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Tullow Oil

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Share Price & News

How has Premier Oil's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PMO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.5%

PMO

-1.9%

GB Oil and Gas

-0.2%

GB Market


1 Year Return

34.8%

PMO

-6.9%

GB Oil and Gas

6.1%

GB Market

Return vs Industry: PMO exceeded the UK Oil and Gas industry which returned -6.9% over the past year.

Return vs Market: PMO exceeded the UK Market which returned 6.1% over the past year.


Shareholder returns

PMOIndustryMarket
7 Day2.5%-1.9%-0.2%
30 Day-10.8%-10.5%-2.7%
90 Day22.0%-9.0%3.9%
1 Year34.8%34.8%-2.0%-6.9%11.8%6.1%
3 Year32.3%32.3%21.3%6.2%17.5%2.6%
5 Year-41.2%-41.2%41.7%13.3%34.8%3.7%

Price Volatility Vs. Market

How volatile is Premier Oil's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Premier Oil undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PMO (£1.04) is trading below our estimate of fair value (£7.4)

Significantly Below Fair Value: PMO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PMO is poor value based on its PE Ratio (8.7x) compared to the Oil and Gas industry average (6.8x).

PE vs Market: PMO is good value based on its PE Ratio (8.7x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: PMO's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: PMO is overvalued based on its PB Ratio (1x) compared to the GB Oil and Gas industry average (0.7x).


Next Steps

Future Growth

How is Premier Oil forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

-39.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PMO's earnings are forecast to decline over the next 3 years (-39.3% per year).

Earnings vs Market: PMO's earnings are forecast to decline over the next 3 years (-39.3% per year).

High Growth Earnings: PMO's earnings are forecast to decline over the next 3 years.

Revenue vs Market: PMO's revenue is expected to decline over the next 3 years (-2% per year).

High Growth Revenue: PMO's revenue is forecast to decline over the next 3 years (-2% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PMO's Return on Equity is forecast to be low in 3 years time (2%).


Next Steps

Past Performance

How has Premier Oil performed over the past 5 years?

27.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PMO has high quality earnings.

Growing Profit Margin: PMO became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: PMO has become profitable over the past 5 years, growing earnings by 27.9% per year.

Accelerating Growth: PMO has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: PMO has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (24.4%).


Return on Equity

High ROE: PMO's Return on Equity (11.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Premier Oil's financial position?


Financial Position Analysis

Short Term Liabilities: PMO's short term assets ($701.9M) exceed its short term liabilities ($577.7M).

Long Term Liabilities: PMO's short term assets ($701.9M) do not cover its long term liabilities ($4.6B).


Debt to Equity History and Analysis

Debt Level: PMO's debt to equity ratio (215%) is considered high.

Reducing Debt: PMO's debt to equity ratio has increased from 87.1% to 215% over the past 5 years.


Balance Sheet

Inventory Level: PMO has a high level of physical assets or inventory.

Debt Coverage by Assets: PMO's debt is not covered by short term assets (assets are 0.3x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: PMO is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: PMO is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Premier Oil's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%1.8%markettop25%5.1%industryaverage5.9%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate PMO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate PMO's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PMO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PMO's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: PMO is not paying a notable dividend for the UK market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of PMO's dividend in 3 years as they are not forecast to pay a notable one for the UK market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.1yrs

Average management tenure


CEO

Tony Durrant (60yo)

5.7yrs

Tenure

US$1,577,400

Compensation

Mr. Anthony R. C. Durrant, also known as Tony, has been the Chief Executive Officer of Premier Oil plc since June 2014 and its Executive Director since July 1, 2005. Mr. Durrant served as the Finance Direc ...


CEO Compensation Analysis

Compensation vs Market: Tony's total compensation ($USD2.05M) is above average for companies of similar size in the UK market ($USD1.18M).

Compensation vs Earnings: Tony's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Anthony R. Durrant
CEO & Executive Director5.7yrsUS$1.58m0.18% $1.6m
Richard Rose
Finance Director & Executive Director5.4yrsUS$935.40k0.019% $163.0k
Robin Allan
Director of North Sea & Exploration and Executive Director16.2yrsUS$947.70k0.069% $598.4k
Paul Williams
Group Development & Operations Manager0yrsno datano data
Stuart Wheaton
Chief Technical Officer0yrsno datano data
Andy Gibb
Group General Counsel & Interim Company Secretary0yrsno datano data
Mike Fleming
Group Human Resources Director0yrsno datano data
Dean Griffin
Head of Exploration0yrsno datano data
Tim Lane
Group Treasurer0yrsno datano data
Rachel Benjamin
Company Secretary (Leave of Absence)4.8yrsno datano data

5.1yrs

Average Tenure

59yo

Average Age

Experienced Management: PMO's management team is seasoned and experienced (5.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Anthony R. Durrant
CEO & Executive Director5.7yrsUS$1.58m0.18% $1.6m
Richard Rose
Finance Director & Executive Director5.4yrsUS$935.40k0.019% $163.0k
Robin Allan
Director of North Sea & Exploration and Executive Director16.2yrsUS$947.70k0.069% $598.4k
Barbara Jeremiah
Independent Non-Executive Director0.8yrsno datano data
Roy Franklin
Non-Executive Chairman2.4yrsUS$175.50k0.0072% $62.5k
Mike Wheeler
Non-Executive Director2.5yrsUS$53.00k0.0036% $31.3k
Anne Cannon
Senior Independent Non Executive Director0.08yrsUS$53.00k0.0012% $10.4k
Iain MacDonald
Independent Non-Executive Director3.8yrsUS$63.60k0.0028% $24.0k
David Blackwood
Non-Executive Director2.5yrsUS$53.00k0.0012% $10.4k

2.5yrs

Average Tenure

61.5yo

Average Age

Experienced Board: PMO's board of directors are not considered experienced ( 2.5 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 28.8%.


Top Shareholders

Company Information

Premier Oil plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Premier Oil plc
  • Ticker: PMO
  • Exchange: LSE
  • Founded: 1934
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: UK£870.682m
  • Shares outstanding: 835.59m
  • Website: https://www.premier-oil.com

Number of Employees


Location

  • Premier Oil plc
  • 23 Lower Belgrave Street
  • London
  • Greater London
  • SW1W 0NR
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PMOI.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1975
PMOI.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDJan 1975
PMOLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1975
PQQBDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1975
PMOLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1975

Biography

Premier Oil plc, an oil and gas company, engages in the exploration, production, and development of oil and gas properties primarily in the Falkland Islands, Indonesia, Pakistan, the United Kingdom, Vietnam, and internationally. As of December 31, 2017, it had proven and probable reserves (2P) of 302 million barrels of oil equivalent (mmboe); and 2P reserves and 2C resources of 902 mmboe. Premier Oil plc was founded in 1934 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 20:48
End of Day Share Price2020/02/14 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.