Sub-$50 Oil Sends Premier Oil PLC, Hardy Oil & Gas plc, EnQuest Plc To New 52-Week Lows

As oil plummets, so do shares in Premier Oil PLC (LON: PMO), Hardy Oil & Gas plc (LON: HDY) and EnQuest Plc (LON: ENQ).

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It’s only a couple of days since the price of a barrel of Brent Crude dropped below $55, and people were already wondering if it would crash through the $50 level.

Well, that question has already been answered as the black stuff dipped to $49.92 in early trading today, although as I write it’s a smidgen above $50 again.

While the big companies like BP and Royal Dutch Shell can ride out such crises, prices like this are seriously hurting some of our smaller firms:

Premier Oil

Shares in Premier Oil (LSE: PMO) crashed to a 52-week low of 146p on Tuesday before recovering a little to end the day at 150.3p, and today they’re heading back down again at 149p as I write. From a 52-week high of 358.6p, Premier Oil is now down 58% with most of that slide coming since the end of September 2014.

At least Premier is profitable and is paying dividends, and there’s a two-year-out P/E of only around 7 forecast for the end of 2016. Is Premier a good oil bet now for the oil price recovery that must eventually come? (It must come, mustn’t it?)

Hardy

There’s no profit expected at Hardy Oil & Gas (LSE: HDY) before 2017 at the earliest, and that’s made its share price quite a bit more volatile. But its fall from peak to trough is similar to Premier’s — from a 52-week high of 123.75p the shares have slumped 52% to a low of 60p.

Hardy, whose exploration is focused in India, told us in a six-monthly update in November that it was “in a strong working capital position” to fund its plans with $22.9m in cash and equivalents, but the plunge in oil prices must surely require re-evaluation of the viability of some of its explorations.

EnQuest

EnQuest (LSE: ENQ) is the biggest faller of these three, with a jarring crunch of 78% from its 52-week high of 148.4p to a closing low of just 31.75p on Tuesday — at the time of writing, the shares are back up a little to 33p. Over five years, the EnQuest price is down 70%.

EnQuest is actually profitable, although forecast earnings per share are very erratic (as they often are due to the nature of explorers’ income), with a slump to 2.4p forecast for 2015 from an expected 6.5p for the year just ended.

Any bargains?

I reckon investing in oil exploration is only for experts, and only those who have the nerves to handle tough periods like this — but if I was at all tempted, I’d be looking for sustainably profitable companies with plenty of cash on their books.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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