Market Report: Genel may become an M&A target because it’s debt-free with a $1bn cash flow


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The Independent Online

New plans to manage payments for oil in Turkey out of Kurdistan helped Tony Hayward and Nat Rothschild’s Genel Energy spurt up nearly 5 per cent yesterday. Analysts rated the oil explorer a buy and raised their price target after news on Friday that a deal has been reached with the Kurdistan Regional Government regarding payments that will now not contravene an existing agreement with Iraq.

All good news for Genel which UBS also predicted could become an M&A target because it is “debt-free” with cash flow estimated to rise to $1bn.

UBS gave it a 1,120p price target for shares that gushed 37p to 1,040p – above its June 2011 float price of 1,000p.

The wider market was boosted by news of the nuclear deal struck with Iran and the weakening oil price. The FTSE 100 rose 20.32 points to 6,694.62 as shares which will benefit from cheaper oil – such as airlines – soared. British Airways-owner IAG was top of the tree, up 10p to 372.8p.

Oil groups fell, though oil and gas services specialist Petrofac was an exception, having agreed a joint venture with Korean-based Daelim Industrial for a $2.1bn (£1.3bn) contract with Oman Oil Refineries and Petroleum Industries. It rose 21p to 1,212p.

At the other end of the pile, gold miner Randgold Resources lost 147p to 4,215p as the gold price weakened.

Construction and support services group Interserve won a £150m partnership with the University of Sussex and collected 11.5p to 635p.

AIM-listed digital entertainment group Amino Technologies warned its full-year 2014 revenue will be level with 2013 sales and it fell 6.25p to 89.25p.

Marine waste-management group Nature issued a profit warning and sank 8p to 27.25p.

Drug tiddler Summit agreed a deal with Oxford University to develop treatments for Duchenne muscular dystrophy and was 0.875p better at 10.125p.

Armadale Capital issued an update from its Mpokoto project in in the Democratic Republic of Congo and was 0.028p brighter at 0.2775p.

Alecto Minerals issued a positive exploration update from a Mali project and sparkled up 0.05p to 1.125p.