UK 01:31 Tuesday, 6 October 2026
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
On Monday Premier Oil (PMO) announced the sale of its Norwegian assets for $120million cash. The company will use the money to help pay down some of its sizeable debts. According to its half yearly report, Premier had net debts of just over $2billion versus cash and undrawn debt facilities of $1.5billion. The business is clearly struggling, as reflected by its share price performance over the last eighteen months. On the verge of tumbling out of the FTSE250, Premier trades at 74p (last seen) and has a market cap of £376million. If things don’t improve for Premier in the near’ish term, this could have a nasty effect on Rockhopper (RKH) and, more specifically, commercialisation of the Sea Lion discovery in the North Falklands Basin.
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Comments
ROB
The essence of this article is OK (namely, there are big question marks over whether the Final Investment Decision for Sea Lion will win garner approval in 2016), but the facts are way, way off. In particular, what exactly does the author mean when he says “Even though there is uncertainty over whether or not the farm in will progress”?? And why would shareholders be “praying” that the farm-in still goes ahead???
There is in fact zero uncertainty on the farm-out. It was finalised, fully in 2012. It’s all legally done and dusted, and was done so years ago. Although Premier can keep kicking the project into the long grass, they are contractually on the hook for the $722m development carry (or what’s left of it, which amounts to $674m). The $231m was paid out back in 2012 (because that was when the farm-in became active!), and the $48m carry has been pretty much used up during the current campaign.
The only way Premier can back out of its contract is if it chooses to hand the entirety of its licences back to Rockhopper. And in that case it would have just spunked about $200m down the tubes on an exploration campaign (which is still ongoing, and gone quite well as it happens), $231m on the initial pay-out back in 2012, and c.$100m on development costs thus far incurred.
You might want to edit a few of the paragraphs here….
wildrides
I cant see it going ahead ……….WTI at $41 ………. no infrastructure on Falklands …………. why would you ? Handing back the licences would be the safest option .