Market Report: Good news out of Africa lifts Ophir
Friday 25 October 2013
News that oil and gas explorer Ophir Energy will let off steam and flog some of its interests in an African gas field was welcomed by the City yesterday.
Ophir has had a troubled year as two of its major investors reduced their stakes and a disappointing drilling programme has meant the shares are down 25 per cent since the start of the year.
News of a potential deal in Tanzania was the first piece of good news for the African-focused explorer in a long while.
Analysts at Nomura said the deal will "provide a genuine reference point for valuation" and because it is retaining some ownership "it leaves Ophir at a relatively attractive price to gain access to further upside in Tanzania through block 7 and East Pande with the Mlinzi and Tende prospects planned to be drilled".
A report from India suggested Ophir is in talks to sell to state-run gas company GAIL, but other traders said that there could be a number of interested parties involved.
Ophir said in a statement that a sale process is "ongoing to sell down a part interest in these blocks but there is no certainty that this process will conclude successfully".
Back in February, investors Och-Ziff Capital Management and Queens Park Rangers part-owner Lakshmi Mittal's Mittal Investments sold around half their stake – around 9 per cent – and the shares have underperformed since.
But after news of the talks emerged it was top gainer on the mid-tier table up 27.3p or 9.19 per cent – to 326.7p.
Chinese manufacturing data helped cheer traders and the FTSE 100 soared above the 6,700 level for the first time since May, adding 38.7 points to 6,713.18.
Will Nicholls, dealer at spreadbetter Capital Spreads said: "The UK blue-chip index has gained 400 points since it bottomed out on the 8 October and investors hanging onto short positions must be beginning to panic now.
"We are sitting just 150 points from all-time highs and now the political and fiscal quandaries are moving behind us, the bulls will be looking for a good run up to Christmas."
The pharmaceuticals giant Shire was top of the blue-chip index on a strong, third-quarter performance and it was 235p better at 2,760p.
Miners were also in favour thanks to the positive Chinese numbers and Mexican precious metals miner Fresnillo revealed details of an early £100m dividend payment and was 28p better at 1,022p.
Engineer Rolls-Royce soared 30p to 1,174p after winning a drilling rig contract offshore Korea.
A while back traders used to spend their time gossiping that a Middle Eastern investor was eyeing property group Hammerson. Yesterday there were vague rumours that an investor from Qatar or Abu Dhabi might be having a look at British Land. The Cheesegrater skyscraper developer built up a 10p rise to 623p.
Lloyds Banking Group advanced 2.21p to 80.12p after news emerged that Aberdeen Asset Management (up 24.8p to 450.4p) is in negotiations to buy its Scottish Widows Investment Partnership.
Meanwhile, the fizz went flat at drinks giant Diageo when punters swallowed the bad news coming from rival Pernod Ricard.
The French drinks group, which owns Absolut Vodka, Martell cognac and Chivas Regal whisky – reported a 9 per cent fall in first-quarter sales which it blamed on a slowdown in emerging markets and currency fluctuations. Pernod, which is the second-biggest drinks group after Diageo globally, follows other brands which have blamed a Chinese government crackdown on "gift giving" among top-level officials for weaker sales in the region.
Diageo and SAB were hit and, respectively, tumbled 16.5p to 2012.5p and 14.5p to 3,233.5p. Pernod fell by more than 3 per cent in Paris.
Fabulous third-quarter results from the media giant WPP helped it create a 12p gain to 1,325p – an all-time high.
The National Audit Office has launched an investigation into the Government's privatisation of Royal Mail amid claims that the group was sold off too cheaply.
Royal Mail floated at 330p and is now up 60 per cent on this price. However, it edged back 8p to 529p yesterday.
Australian investor Caledonia (Private) Investments Pty has upped its stake in estate agent Foxtons to 8.15 per cent which increased 1p to 305p.
A new contract win helped Aim-listed commodities trading software group Brady rise 7.25p to 71.25p.
Aim-listed property consultancy Sweett Group said that its full-year numbers could be ahead of expectations and it rose 2.5p to 51p.
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