Market Report: Afren continues slow descent into the world of penny stocks


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The Independent Online

Just how long can Afren survive? The troubled oil and gas explorer, which said at the start of the week that it was in dire need of a cash injection, continued its slow descent into the world of penny stocks yesterday, falling 0.5p to 4.2p as Oriel Securities slashed its target price from 38p to 2p.

It came as a major shareholder, the Norwegian fund manager Skagen, cut its stake in Afren for the second time in two days. Gerry Donnelly, a FirstEnergy analyst, said: “Equity holders are slowly realising the company’s fate is largely out of their hands and is more than likely to be decided by bondholders and debt providers.”

The Nigerian oil company Seplat expressed an interest in merging with Afren last  year but the deadline for a deal is today and investors hold out little hope. A trading update is due next week and Donnelly said these two events “effectively set a timetable” for the company’s future.

Afren’s woes came amid a day of pain for the wider oil and gas industry and a bleak assessment of the sector from Royal Dutch Shell, whose shares fell 110p to 2138p. Energy stocks wiped 33.15 points off the FTSE 100 index, which closed 15.34 points lower at 6810.6.

The Chilean copper miner Antofagasta slipped 18.5p to 655p as Nomura, JPMorgan and Citi all trimmed their target prices on the back of production results a day earlier.

A ringing endorsement from Barclays helped easyJet to outperform the market and its shares rose by 109p to 1876p. The bank said the budget airline has “developed a business model that continues to exceed expectations”.

Shares in the casino and bingo operator Rank Group leapt by 12.1p to 178p on the mid-cap index thanks to a 29 per cent jump in first-half profits, to £35.8m. Its chief executive, Henry Birch, praised the performance of Rank’s London casinos.

Fitbug, a London-based company which makes wearable fitness monitoring devices and is a favourite of retail investors, saw its shares jump by 1.5p to 6.87p after it announced that its Slim + Trim Kiqplan workout programme will be offered on the new Jawbone Marketplace – an online store for fitness and health apps and devices.