Daily Telegraph (UK): Tiof field holds key to Cairn: “Oil wild-catters, dedicated to sniffing out oil reserves in the world's most uninhabitable places, have had a gushing year. Cairn is the leader, having outwitted its rival, Shell, to strike black gold in India. The enormous find, plus the high oil price, catapulted Cairn into the FTSE 100.” (ShellNews.net) 13 Nov 04
The Questor column
Edited by Harry Wallop (Filed: 13/11/2004)
Oil wild-catters, dedicated to sniffing out oil reserves in the world's most uninhabitable places, have had a gushing year. Cairn is the leader, having outwitted its rival, Shell, to strike black gold in India. The enormous find, plus the high oil price, catapulted Cairn into the FTSE 100.
Premier Oil also has an interest in India, although its patch is near the Burmese border. The company is being touted as the next Cairn. In reality, the two companies have little in common. Premier's strategy has been to hold small stakes in about 10 or 12 countries rather than invest big money in single projects.
The lack of focus and the announcement that chief executive Charles Jamieson is leaving next year has troubled analysts. But there are upsides.
One of the most exciting is Mauritania - Premier's African Queen. The off-shore territories represent the key to any near-term boost in the company's fortunes. The shares dropped 36p to 593p on news on November 5 that the Capitaine bloc, which Premier thought could hold 350m barrels of oil, is dry. This week they fell to 564.5p.
Since Premier's assets have been priced so fuzzily, it is difficult to tell whether the company is undervalued.
The rig that drilled the dry Capitaine bloc is now moving to the Tiof field and Premier's share price depends on what it finds.
The Tiof field, in which Premier has a 9pc stake, is estimated to contain between 200m and 400m barrels of oil.
Premier shares are fairly pricey at 22 times estimated earnings for this year and the company pays no dividend. Do not buy until the results from Tiof are in.