Shares of Harbour Energy PLC (LON: HBR) edged 4.54% higher in its first positive day since the former Premier Oil shares started trading as Harbour Energy shares after completing the reverse merger between Chrysaor and Premier Oil on April 1.
The oil company is now the largest oil and gas producer in the British North Sea. Many other producers are focused on selling their assets in the region characterised by high production costs.
As a large producer, the company’s production costs are much lower than those of other players, with its operating costs being $15 per barrel and its breakeven point is no more than $35 per barrel.
Harbour Energy is set to benefit from the rising global crude oil prices, with a barrel of Brent crude oil currently trading at over $64, resulting in significant margins for the company.
From a technical standpoint, the company’s shares could form a floor at their current prices and surge higher, creating a favourable outcome for existing shareholders.
However, investors looking to open long-term positions may prefer to wait until the three month lockup period for the new shares to end since it usually triggers a selloff as large shareholders offload some of their shares to free up capital.
Short-term traders could play any move higher, but they should also monitor the end of the lockup period as profitable positions could quickly turn negative in the resulting selloff.
The fundamental picture is not as straightforward since the company has a debt burden of over £2 billion, which is high compared to its market capitalisation of £3.7 billion. The company has to repay its debts in future, which could create a lot of volatility in its share price.
Long-term investors have to brace themselves for such volatility. Changes in the price of crude oil could also lead to volatility in Harbour Enr=ergy’s share price.
Harbour Energy share price.
Harbour Energy shares edged 4.54% higher to trade at 19.34p, rising from Tuesday’s closing price of 18.50p.
