UniCredit Bank Reiterates its BUY Rating on Premier Oil

October 10 00:00 2011

LONDON, October 10 (RainbowNewsLine.com) – Analyst Kofi Osafo-Maafo of UniCredit Equity Research maintains his BUY rating on the shares of Premier Oil (LSE: PMO). The target price is set to £6.15. The share has experienced 12-month high of £5.35 and low of £3.10.

The analyst has reiterated buy opinion mainly due to the acquisition of Encore Oil and the positive operational update. The acquisition was made under a deal in line with company’s strategy, which included UK North Sea, the analyst says in a research note published this morning. Premier is paying £70/share, which is a 55% premium on the share price before the close of deals announcement. In the end, Encore shareholders will hold 12.2% of the enlarged group.  The Chim Sao discoveries underlined in operational updates may add £11 / share, the analyst adds.

The analyst believes that Premier Oil possess a good balance of growth and exploration. The key highlights for an investment would be 75% upside to potential in NAV, 57% of upside potential to the value of core and contingent assets, and strong production growth. Some key projects in Asia and UK if undertaken or more exploration success in core areas may result in stock to trigger, the analyst says. The analyst believes that Premier Oil has clear business idea about how it will achieve its growth targets by 2014 from assets under development, thus warranting the reiteration of BUY recommendation.