Currently I'm holding Premier Oil share,With recent merge news,Not sure to hold or sell.Anyone on the same boat or any advise
I am in the same boat. New to this investing malarky.
I did read - " Harbour is expected to boast a market value of more than $5 billion, according to Jefferies, a level never achieved by Premier. Jefferies’ price target of 30 pence a share “rates the stock a true investment peer to Norway E&Ps but with differentiated upside from exposure to international M&A growth,” it said.
Chrysaor shareholders will own 77% of Harbour Energy, with 18% held by Premier’s creditors and only 5% by Premier’s current shareholders."
5% of £5bn in £250m which would mean the current market cap of Premier Oil is expected to increase slightly as its £223m (possibly to 30p as stated above).
I'm not really sure what a fair valuation would be for the new company. I think I'll hold for now and see what happens and try and do a bit more research.
I've done some quick calculations...
Assuming $50bbl oil price at 250,000 boepd = £3.25 billion in revenue
Assuming operating costs of $40bbl = £2.6 billion in expenses (I saw a Chrysaor report from buying COP assets the cost per barrel was $15 so I'm being conservative)
This would be £650m a year of profit which 5% would belong to current Premier shareholders = £32.60m.
Based on 878m shareholders that's around 3.7p per share in profit. If P/E reaches 10 that's 37p share price.
So I think there could be significant upside but I am pretty clueless and happy to be told I'm wrong!
