Market Report: Announcement of potential fracking sites brings ray of sunshine to UK oil industry

 

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The Independent Online

Amid a gloomy backdrop of mass job cuts and falling profits, there was a ray of sunshine for the UK’s oil industry as large swathes of land across the country were offered up to potential fracking operators.

The Oil and Gas Authority, the newly created energy regulator, said that 27 onshore blocks would be offered to companies in the first licensing round in seven years, with 132 more blocks to be doled out further down the road. More than half of the area on offer is thought to contain shale gas – the extraction of which requires fracking.

The Aim-listed IGas, down 0.5p at 27.25p, has provisionally been granted seven blocks in the East Midlands close to its existing operations, with five as part of a joint venture with French energy giant Total and fellow Aim explorer Egdon Resources, down 0.25p at 13.25p.

Chemicals group Ineos, which forged a partnership with IGas earlier this year, has snapped up three blocks, while IGas’s other partner GDF Suez was granted one block. The licences will not be formally awarded until a public consultation is wrapped up.

The wider oil picture was much bleaker, with a continued fall in crude prices hitting majors BP, down 4.4p at 373.75p, and Shell, down 29.5p at 1,782.5p, despite the latter being given the green light to drill in the Arctic.

The miners made life worse for the FTSE 100, which fell 24.01 points to 6,526.29, after yet more fears about China’s thirst for raw materials.

Asda’s continued sales struggle affected Tesco, which fell 3.6p to 198.6p. Morrisons fell 1.6p to 174.1p.

About 5,000 job cuts failed to stop profits falling at the oil services firm and North Sea employer Wood Group, which underlined the sector’s problems. However, a boost to  the interim dividend provided some comfort for investors, lifting the stock 2p to 581.5p.

Among the few blue-chip risers was Glencore, up 6.1p at 176.1p ahead of today’s first-half results, after its hammering in recent weeks.

Buyers also chased drug maker Shire 85p higher to 5,245p as its battle for US rival Baxalta heats up, with its gains attributed to a rise from its US-listed shares.

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