Premier Oil profits soar, shares dive on dry well

By Tom Bergin

LONDON (Reuters) - Shares in oil explorer Premier Oil (PMO.L) dived over 8 percent on Thursday after it said a well it had sunk in Vietnam failed to hit commercial quantities of oil, overshadowing a 247 percent rise in first-half net profit.

Premier said in a statement its Chim Cong well was being plugged and abandoned, while strong oil prices and higher production lifted profit to $71.2 million, in line with analyst forecasts.

"A record set of interim financials, backed up by a solid operational performance," Richard Rose, oil analyst at Oriel Securities said in a research note.

Premier shares recovered to trade down 7.1 percent at 1,234 pence at 3:10 p.m., compared with a 0.1 percent drop in the DJ Stoxx European oil and gas index .SXEP.

"The fact the drilling campaign is not likely to give results until 2009, people are seeing the disappointment today as an excuse to sell the shares," one analyst who asked not to be named said.

Like other oil explorers, Premier's shares usually move most on new discoveries, but with its drilling plans focused on 2009, few positive catalysts look likely in the coming months.

Premier said production rose 11 per cent to 38,000 barrels of oil equivalent per day (boepd) in the first half, thanks to higher output from North Sea fields.

A company poll of five analysts had given an average forecast of $72 million for Premier's first-half net profit.

(Editing by Richard Hubbard and David Holmes)