BUZZ-Premier Oil: Old Mutual's Watts sees stock outperforming beleaguered sector

** Richard Watts, who runs the Old Mutual Global Investors UK Mid Cap Fund, says he recently dipped into Premier Oil (LSE: PMO.L - news) betting on better cash flows in 2016

** Steering clear of rest of midcap E&P sector though as asset write-downs, project delays and deteriorating balance sheets brought about by slide in crude weigh darken the outlook

** Midcap E&P cos are geared play on oil price & co fundamentals far from appealing; BP CEO Bob Dudley's recent comments on oil price very bearish

** Similarly on oil services cos, the scything of capex by Big Oil makes him worry profit forecasts could more than halve over next 12 mths

** On Premier Oil, Watts says once hedges have rolled off & assuming crude recovers to $60 a barrel, co would become cash flow positive

(RM (LSE: RM.L - news) : tricia.wright1.thomsonreuters.com@reuters.net)