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Peel Hunt looks forward to completion of Premier Oil refinancing, sets ‘buy’ recommendation

Peel Hunt sets a 'buy' recommendation for Premier Oil and with a 90p price target the City broker sees some 35% upside to the current price.
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Attentions will turn to growth and debt reduction once the debt deals close.

City broker Peel Hunt has started its coverage of Premier Oil PLC (LON:PMO) with a new 90p price target, suggestion some 35% upside to the current price.

Analyst James Carmichael expects Premier will complete its vital refinancing deal, marking a key turning point for investors to focus on the company’s growth and debt reduction - and that ought to provide opportunities for share price catalysts.

“The portfolio provides flexibility to outperform our forecasts and we see potential for a share price re-rating as rising production and falling opex are reflected in improved cash flows. We also flag near-term exploration upside,” Carmichel said.

He cautioned, however, that Premier Oil remains highly geared and therefore the share price remains sensitive to further oil price weakness.

Peel Hunt’s valuation (discounted cash flow) of Premier Oil’s portfolio yields a core net asset value of £481m, equating to 78p per share, and it ascribes 13p per share for exploration assets.

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Oil Capital, a subsidiary of Proactive Investors, acts as the vanguard for listed oil companies to interact with institutional and highly capitalised investors.
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