Market Report: Fresh licence lifts Bahamas Petroleum
As the UK was braced for tropical weather with storms on the way, punters decided a bet on an oil explorer in the Bahamas was appropriate yesterday. Bahamas Petroleum gushed as much as 20 per cent in morning trade on news that it had got its licences renewed and extended by the Bahamas Government and the Ministry of the Environment.
Investors think the forecast is now much sunnier for Bahamas following a stormy 2012 for the AIM-listed explorer. The ruling party on the Atlantic Ocean island had not been in favour of oil exploration and when Bahamas’ licences ran out last year there were fears they would not be renewed. But a new government in September deferred a referendum on drilling in the area.
Yesterday the news that Bahamas has got the term of its licences extended until 2016 provided confirmation that the climate has improved for the Isle of Man-based explorer.
The conditions of the licence mean Bahamas must start drilling by April 2015 and Simon Potter, its chief executive, said he expects to start by the end of next year. He also said talks on the drilling programme are under way with “a number of potential partners”. Analysts at First Energy said: “The extension of the licence removes uncertainty for a prospective farm-in [partner]. We would anticipate progress on securing a farm-in sooner rather than later.” Bahamas Petroleum, which has five licences in the region, jetted 0.35p to 4.175p.
It was quiet across the wider market and the FTSE 100 slipped 7.5 points to 6,623.17 points.
David Jones, chief market strategist at spreadbetting company IG, said: “The FTSE 100 was drifting aimlessly for most of the day. Economic data has been a touch poorer, but not bad enough to inspire panic or change expectations about central bank policy.
“Overall, the market has something of the ‘coiled spring’ about it, seeming to be waiting for an excuse to move higher.”
Among the stocks that did manage to push ahead were the gold miners. After big falls earlier this summer the gold price pushed above $1,300 yesterday. The recent rise and a note from analysts at JP Morgan entitled “The Gold War” helped metal miners Randgold Resources and Fresnillo to the top of the table. JP Morgan pointed out that although gold and silver prices are down 28 per cent and 44 per cent respectively since the peak in the fourth quarter of 2012, “investors underappreciate the potential for self-help among the UK gold producers”. Fresnillo rose 35p to 1,064p and Randgold was up 252p to 4,777p.
JP Morgan also rated mid-cap miners Polymetal International, up 27.5p to 624.5p, and African Barrick Gold, 5.9p stronger at 112.6p. They noted that these miners have “flexibility to reduce costs and protect free cash flow”.
Nat Rothschild’s Bumi was back in focus when the coal miner resumed trading after a three-month suspension. The London-listed coal producer is splitting the company after a long-running dispute between its founders, the Bakries and financier Rothschild.
Last week Bumi agreed to sell its 29.2 per cent interest in Indonesia’s Bumi Resources to the Bakrie Group for $501m (£327m) and Bumi’s chairman, Samin Tan, is buying the Bakries’ stake in the miner.
Shareholders have had a rough ride since it floated at 1,000p in 2010. It was down 22.3p to 237p yesterday. It wasn’t all bad news for Mr Rothschild, though. His oil explorer, Genel Energy, produced a positive update from the first horizontal well at the Tawke field in Kurdistan, where it owns 25 per cent. It edged up 6p to 933p.
The Kurdistan oil explorer Gulf Keystone Petroleum kissed and made up with shareholder M&G Recovery Fund and agreed to withdraw its opposition to four directors proposed by M&G. Gulf Keystone climbed 5p to 177.75p.
The US onshore oil group Magnolia Petroleum released a well update from its Bakken site and said it had more than doubled its production. Its shares rose 0.025p to 2.43p.
The emerald miner Gemfields reported its second largest total sales from an auction of emerald and beryl in Zambia. The group earned $31.5m from the auction in Lusaka and rose 1p to 21.63p.
Ceres Power, the fuel cell technology developer, signed a deal with Korea’s biggest manufacturer and supplier of domestic boilers and the shares heated up 0.15p to 9.3p.
Property adviser Sweett Group said trading was outpacing management expectations, with sales for the quarter at £19.1m, up from £17.3m, and shares gaining 5.5p gain to 31.5p.
Snap up shares in Abcam, Investec insists. The broker thinks the Cambridge-based medical business produced a good update yesterday and expect the results for the year are likely to be slightly “ahead of consensus”. They rate it a buy with a 504p price target for shares that are 452p.
SELL: LLOYDS BANKING GROUP
Flog shares in Lloyds Banking Group, Espirito Santo suggests. The broker thinks that the bank’s share price has been boosted by “greater visibility on capital, improving economic outlook and the Government’s Help-to-Buy”. But they think the valuation is too high and there is an overhang of risk until the Government sells its stake so they rate it a sell with a 59p price target for shares that are 69.21p.
Hang on to the property group Segro, the broker Jefferies advises. It thinks the Slough-based property group’s sell-off of some of its assets is good news as it de-gears its balance sheet. But for now the sale proceeds will sit as cash until it can redeploy the funds, so it rates it just a hold, with a 244p price target for shares that are 306.6p.
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