Market report: Premier Oil’s big find sparks hopes of Mexican takeaway

Investors in Premier Oil welcomed a return to its swashbuckling roots today as the beleaguered oil firm hit the mother-lode off the Mexican coast.

The company, which has been more concerned about slashing its huge debt pile in recent years amid lower oil prices — forcing it to rein in exploration spending — unveiled a “world-class oil discovery” off the shore of Mexico.

The oil firm has a 25% stake in the Zama-1 well and is part of a consortium with US firm Talos Energy and Mexico’s Sierra Oil & Gas. Initial estimates suggest the well could contain more than a billion barrels of oil.

Premier Oil began life in the Thirties as the Caribbean Oil Company and became known for its big oil discoveries in far-flung parts of the world. The oil find, hinting that there’s life in the old dog yet, caused the shares to gush 12.75p, or 28%, higher to 59p.

Premier’s rise was further polished by a rise in crude oil prices as Brent gained 79 cents or 1.7% to $48.31 a barrel after a lower forecast for US output next year.

Oil’s gains boosted the UK’s supermajors which in turn gave the FTSE 100 a lift as it rose 46.43 points to 7376.19.

Housebuilder Barratt Developments was up 3p at 587.5p after revealing pre-tax profits for the last year will be ahead of expectations, up 12% at £765 million.

As Buy notes go, Morgan Stanley’s double upgrade to Overweight on B&Q-owner Kingfisher was hardly a resounding thumbs-up.

“We still expect ‘One Kingfisher’ to fail,” the first line of the broker’s report read, referring to its five-year transformation plan. However, the broker thinks the shares are cheap based on the company’s assets.

On AIM, online mattress seller eve Sleep rose 0.5p to 95p after a solid first-half trading update as it grew revenues by 126% to £11.5 million.

ASA Resource Group jumped 0.56p, or 44%, to 1.84p as it got a £35.5 million takeover offer from Hailiang, the Chinese copper giant.

It is already a small shareholder of the Zimbabwe-focused gold miner, which in April revealed millions of pounds had gone missing from its bank accounts without explanation and removed the Chinese chief executive and finance director.