I’ve had something of a love/hate relationship with Premier Oil (LSE: PMO). Yes, I know, I should never get emotionally attached to a stock. And I do try not to, honest. But the Premier Oil share price has had me swinging between excited optimism and despair for a few years now. Let me tell you my tale.
I bought back in September 2015, close to the depths of the last oil price crash. The PMO share price looked a good choice for the recovery I saw as inevitable, and I plonked down 99p per share. By January, the price had crashed to just 19p and the shares were suspended. Got the timing wrong again, idiot!
Up, down, up…
Once trading recommenced, the price started to pick up and I held on. But by December 2019, after a roller-coaster ride, I decided I’d made a mistake. I’d abandoned my mature safety-based strategy in pursuit of the riskier growth stocks I favoured in my youth. So I got my act together and sold, at 89p for a loss that wasn’t too painful, and vowed never to care about the Premier Oil share price again. Of course, it promptly climbed to 120p in January. There’s my terrible timing again.
But then the Covid-19 pandemic led to a stock market crash and a new oil price slump. And the PMO share price plunged again, falling as low as 10p. Phew, lucky timing for once, and I breathed a sigh of relief. Now, surely, I can forever put Premier Oil out of my mind.
Premier Oil share price
Except I can’t. I love a twisty turny stock story. And I owe it to myself (and my readers) to keep my thoughts updated. It’s educational, see, to keep up with our failures and make sure we never forget the lessons. So what do I think now, with the Premier Oil share price all the way back up to 52p again?
Well, I won’t buy-in again myself. That’s because Premier Oil really doesn’t fit my strategy. But if I were 30 years younger? With more time ahead of me to make and recover from mistakes in the pursuit of big growth opportunities?
I only see two likely outcomes for the Premier Oil share price now. Either the company will collapse under the weight of its debt and the price will drop to zero. Or it will survive, will get back to chipping away at that debt, and the PMO share price will climb over the long term.
Survival or bust?
Which will it be? Much like my thoughts on Tullow Oil a few days ago, I’m optimistic again. As recently as this month, Premier told us its plans to acquire assets from BP were going ahead. It will fund part of that from a new share issue, so there’ll be a little dilution, But that’s definitely not the action of a company circling the drain.
Premier also has proposed amendments to its credit facilities in the pipeline, but there seems to be little urgency there.
So yes, I see the Premier Oil share price as a promising buy right now, if still risky.
Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.