Market Report: Low prices continue to bite oil producers

The stakes are getting higher and the margins thinner for oil companies.

As low oil prices continue to bite, the chances of operators going under are getting higher and Tullow Oil was the subject of a warning from Jefferies yesterday. The broker trimmed its target price, warning that the perfect execution of Tullow’s Ten project in Ghana is a “basic requirement” to justify its value. What’s more Tullow could “technically” breach its banking covenants this year, although Jefferies says “We are confident the banks will be supportive.” Tullow tumbled 15.2p to 392.1p.

Despite optimism at opening, the FTSE 100 failed to reach the record-breaking heights many had hoped for, closing down 3.04 points at 6,912.16. Disappointing results from HSBC, off 28p at 577.2p, hit the index, with Standard Chartered, down 45.4p at 928.1p, suffering amid fears of similarly bleak numbers on the way.

London Stock Exchange climbed 45p to 2,506p after Numis increased its target price to reflect the upcoming sell-off of the Russell Investment Management business.

Packaging group DS Smith climbed 13.1p to 360.3p on news that it is snapping up recycled cardboard business Duropack for €300m (£220m).

Deutsche Bank was giving tough odds on Labrokes, as it warned results on Thursday might show “another year of sizeable market share losses”. The investment bank believes whoever replaces outgoing chief Richard Glynn will have to hike advertising spend, with a knock-on effect for profits. Ladbrokes dipped 6.3p to 115.7p.

Insurance outsourcer Quindell rocketed 20p to 96p – talks to sell all or part of its legal division to Australian law firm Slater & Gordon are still on. Management added that the current price being discussed “would imply a significant premium to the company’s market capitalisation”. It follows reports over the weekend that Slater & Gordon have reduced their offer.

Oil services company Nature Group jumped 3p to 15.25p, thanks to the sale of one of its waste water collection vessels for £1.8m.