I dumped Premier Oil shares in December 2019, and I got 89p per share for them. That was 10p less than I paid back in 2015. But I reckoned I’d had a lucky escape at the time. The Premier Oil share price did climb to 120p not long after I sold, and I put that down to my bad timing again.
But then, when the Covid-19 crisis sent Premier shares crashing as low as 10p, I decided I’d been a clever chap after all. And I turned my attention to other investments, determined never to invest in a risky oil stock again. But I’ve recently been wondering what happened to the Premier Oil share price since I turned my back on it.
When I last examined Premier, I suggested: “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.”
The end for the Premier Oil share price
As it turned out, a third thing happened. In 2021, Premier entered into an all-share merger with Chrysaor Holdings Limited, in a deal that included debt restructuring and cross currency swaps. A merged entity named Harbour Energy (LSE: HBR) started trading on the London Stock Exchange on 1 April. That’s a date that might well appeal to any of us here at The Motley Fool. So what’s this renewed company looking like?
The Harbour Energy share price has not exactly been a roaring success so far. From a high of 454p on opening day, the price was steady for a while but has plunged since mid-June. At 335.5p as I write, we’re looking at a 26% loss. Saying that, the shares have been picking up a little in the past week or so.
Oil is back up around $75 per barrel. And that’s the kind of level that, in the past, I’ve thought should provide a decent safety buffer. So should I think the unthinkable, and get back into Premier Oil (albeit in the guise of Harbour Energy) now?
Full-year guidance looking good?
Harbour released an operations update on 21 July. Due to electrical system problems at its Tolmount platform, first gas will be delayed probably until close to year-end. Omitting that, the company said: “Harbour’s 2021 production guidance is now 185 to 195 kboepd on a proforma basis and 170 to 180 kboepd on a reported basis.”
Harbour puts its estimated operating costs at $15-$16 per barrel of oil equivalent. And when I read that, I perked up. Does it fit with my idea of a safety margin? I’d need to work out full cash costs per barrel.
I can’t quite get my head around a valuation for the Harbour Energy share price in terms of the old Premier Oil share price. Some fuller figures would help, and first-half results are due on 23 September. I know I probably shouldn’t be considering it. But I’ll at least watch where the oil price goes between now and then.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
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.