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Barclays upgrades Premier Oil as stronger crude price eases debt concerns

Premier Oil shares advanced on Thursday after yesterday's trading update and an upgrade from Barclays
oil and gas operations
Barclays now rates Premier Oil as 'overweight'

Premier Oil PLC (LON:PMO) shares have been upgraded by analysts at Barclays, with the bank raising its rating to ‘overweight’ from ‘equal weight’.

Barclays has a 145p price target, suggesting some 22% upside to the current price – Premier shares, meanwhile, advanced about 5% to 118p.

READ: Premier Oil’s Catcher field ramp-up continues

It comes as Barclays analyst James Howie revised a number of exploration and production companies, in the wake of the strengthening crude price.

Howie, in a note, highlighted that as better prices boost cash flow, it will be the debt-levered oil producers that should benefit most. Barclays’ new Brent base case is now fixed on US$65 per barrel, up from US$60.

Specifically, for Premier Oil, the analyst believes Brent crude prices at around US$70 through 2018-19 will remove any remaining balance sheet concerns and it will allow the management team to focus more on growth projects.

At the same time, Kosmos Energy PLC (LON:KOS) was also upgraded by Barclays to ‘overweight’ from ‘equal weight’ and set a US$9.40 target.

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