Does the new oil crisis make the Premier Oil share price unmissable?

first_img “This Stock Could Be Like Buying Amazon in 1997” Does the new oil crisis make the Premier Oil share price unmissable? Image source: Getty Images These are not comfortable times for Premier Oil (LSE: PMO) shareholders. And with an oil price slump in full swing, looking at the Premier Oil share price chart isn’t for those of a nervous disposition.The shares had only just been getting some life back after the previous downturn, reaching as high as 120p at the start of the year. Premier’s debt had come close to crippling the company back when the price of oil had fallen to $30. But with oil up in the $60-$70 range, things were looking better.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…At the end of December, Premier had got its net debt down to $1.99bn. That’s still scarily high, but a lot better than the $2.33bn a year previously. The firm’s covenant leverage was still concerning at 2.3x but, again, significantly better than 2018’s figure of 3.1x.Free cash flow came in at $327m, and the share price was starting to look sustainably healthy again.Oil price crisisBut then Covid-19 arrived. We had lockdown, the FTSE 100 crashed, oil demand plummeted and the Premier Oil price slumped once more.A barrel of Brent crude is fetching around $20, as I write, and the Premier Oil share price is down to just 21p. And we’re back asking the same questions we were during the last oil price shock. When will oil recover? What level will it reach? And, crucially, can Premier Oil survive until it happens?This time round, yes, I’m sure the oil crisis will end and prices will recover. How high? It’s only a guess, but I can see oil getting back to long-term prices of between $50 and $75 again. At those levels, Premier will be able to generate profits and strong cash flow. And get back to paying down that debt.Multibagger recovery?So when the oil crunch does end, I can see the Premier Oil share price recovering again. From today’s low levels, I really can see the chance of a multibagger here.But that can only happen if Premier can survive long enough in the meantime. As my fellow Motley Fool writer Rupert Hargreaves has pointed out, Premier has cash of $135m and undrawn debt facilities of $330m. The firm is planning to reduce capital spending by $100m per year too, which will also help.And having hedged 30% of its anticipated 2020 oil and gas production, as Rupert says, it looks like Premier can hold out for a while at $20-$30 oil price levels. The big question is how long?Premier Oil share priceIf debt facilities are drawn down much further and net debt starts to pile up again, I can see investors being more reluctant to pile back again this time round. And I can see the Premier Oil share price languishing at its current lowly depths for longer.Even when we’re out of the current oil crisis, Premier will still face the longer-term risks of running a business with very high debt levels. And it could be back at square one in trying to get down a newly-inflated debt pile once again.I do think there’s a decent possibility of a big profit here. But I also see a chance of a wipeout. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. 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.center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. 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