Market Report: $10bn if Shell cracks it with Arctic drilling

  • @greentoby

Environmentalists may want to look away now. Royal Dutch Shell's search for oil in the Arctic has not been short of controversy, coming under attack from, among others, Xena: Warrior Princess actor Lucy Lawless (pictured), who earlier in the year boarded one of the energy giant's ships in protest against the drilling.

Yet yesterday came a reminder why Shell is pushing on with its quest — money, and rather a lot of it. Ten billion dollars (£6.4bn) in fact, according to the calculations of Nomura's analysts, who think that is how much Shell could net from the region.

"Success in Alaska would be material to the share price, even for a company the size of Shell," they claimed, adding it could put it "at the forefront of Arctic exploration". As a result the scribblers kept their buy advice and 2,700p target price as Shell was lifted 32p to 2,225p.

It was not the only drilling campaign getting the Square Mile hot under the collar. Pointing out that an update from its Kenyan drilling was due soon, the scribes at Bank of America Merrill Lynch said they believed Tullow Oil's operations in the country could be worth 1,100p a share. The explorer rose 40p to 1,494p.

As investors hoped today could bring good news from the US Federal Reserve on the possibility of QE3, the FTSE 100 was driven up 95.22 points to 5,586.31, a six-week high, despite plenty of sceptics urging caution. There was no escape from the eurozone for Tate & Lyle, 8.5p lower at 638p, and Unilever, 12p off at 2,075p, however. They were among the handful of blue-chip fallers after French food company Danone blamed a profits warning partly on trading being troubled in the south of the continent.

Presentation days for analysts and investors don't often give stocks a major boost, but Weir jumped 66p to 1,503p after holding its. The pumpmaker, which has fallen more than a third in four months, reassured the market by confirming its full-year forecasts while also announcing it was aiming to double operating profits from its minerals unit by 2016.

Arm Holdings won't care whether Microsoft's new Surface tablet takes share away from Apple's iPad; the chip designer's technology is in both. As well as the launch of the former, the group was also pushed up 17.4p to 508p by promising trials of Arm-based servers by US partner Calxeda.

The bosses at AstraZeneca were getting yet more advice about what to do following the drugs maker's recent woes. The scribblers at Liberum Capital argued a merger with AbbVie, the pharma business of US rival Abbott Laboratories which is being spun off, would be a "best-case" scenario, as Astra charged up 77p to 2,760p.

Meanwhile, with US diabetes specialist Amylin believed to be interesting a number of groups, JPMorgan Cazenove's Alexandra Hauber calculated that of the possible bidders, Astra would get the highest earnings boost.

Market gossips were enjoying a repeat as familiar takeover speculation was revived around ITV. The vague rumours again suggested private equity as a potential bidder, maybe with an industry player from Europe, although dealers were dismissive of the whispers, which mentioned a possible price of 150p a pop, as the X Factor broadcaster moved 2p higher to 74.25p.

Grolsch brewer SABMiller fizzed up 40.5p to 2,519p after Shore Capital's Phil Carroll changed his advice to buy while arguing that he would "not dismiss further consolidation in the beverage sector". A takeover by rival Anheuser-Busch InBev, he said, "remains a possibility".

Meanwhile, traders highlighted reheated bid speculation regarding Ophir Energy, although they played it down at the same time, as the Africa-focused explorer, which was holding its AGM, finished 9.5p stronger at 635.5p.

After positive updates from high street names Whitbread, up 118p to 1,967p, and Home Retail, up 17.5p to 91.85p, Dixons, which releases results tomorrow, ticked up 2.31p to 15.91p, assisted by Bank of America removing its sell advice.

On Aim, investors in i-design were in the money after the advertising software company agreed a major deal with US ATM operator First Data, prompting it to shoot up 6.5p to 41p.