On another day coloured by oil and company results, those from Tullow Oil proved a touch watery.
Though profits were a thumping 361 per cent better in 2010, $152 million (£94 million) was rooted firmly at the heel of what was expected by analysts who follow Tullow.
Neither were there any welcome surprises on drilling to lift the spirits and the shares; nor closure on its long-running tax dispute with Uganda, despite those rumours of a settlement pervading the market throughout the week.
The wrangle with Kampala — over how much tax is liable on Tullow’s £973 million purchase of Heritage Oil’s Ugandan assets last year — continues to stymie plans for an important $10 billion partnership there with Total, of France, and CNOOC, of China.
Write-offs were higher and so, too,were costs. With scant reason to buy, Tullow shares retreated 47p to £14.13 in the drabbest performance by any FTSE 100 constituent.
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No so Heritage, the mid-cap explorer chased sharply higher for a second day by rumours of possible bids for either all or part of a company under pressure since striking gas and not oil in the Kurdish region of Iraq.
Barclays Capital, it was said, had cleared a big seller of Heritage shares this week and that, too, was primping the price, a further 23p higher at 305p.
Fiercer fighting in Libya propelled the oil price, with a barrel of Brent crude touching $116.11 at best.
Although a later report of hefty American stockpiles drew some of the heat from oil prices in late London trading, by then worries had set in about the possible effect of higher costs on the global economic recovery.
Miners tracked base-metal prices lower, investors displayed little appetite for risk or for shares generally and the FTSE 100 fell 37.46 points to 5,937.30.
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Much of that retreat was attributable to those half-dozen Footsie constituents marked sharply lower as they started to trade without rights to the next dividend: British American Tobacco, maker of Dunhill cigarettes; the property group Hammerson; BHP Billiton, the “Big Aussie” miner; Standard Chartered bank; Serco, the support services group; and the drug developer Shire.
Confirmation came of the elevation to the blue-chip index for the X Factor broadcaster ITV, the oil services group John Wood and Hargreaves Lansdown, a Bristol wealth manager. Their promotion came at the expense of Alliance Trust, a Scottish fund manager, the miner African Barrick Gold and the packing company Bunzl.
On another full day for company results, Prudential’s exceeded even the most optimistic expectation, lifting its dividend by a fifth, its shares 35p to 749p and rest of the sector in its wake.
Under pressure from roaring oil prices of late, record profits and a big aircraft order from Cathay Pacific brought welcome relief to International Consolidated Airlines Group, the merged British Airways and Iberia, 4p higher at 232½p.
But Yule Catto, a chemicals company, another heavy user of oil and long-standing subject of bid speculation, fell 18¾p to 209p after signalling that its costs were being bumped by the unrest in the Middle East. Randgold Resources reassured that the violence in Ivory Coast had not affected its Tongon mine there and rallied 149p to £46.29, further burnished by gold’s haven credentials .
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Stellar Diamonds has raised £6.2 million by selling new shares at 8p, comfortably above Tuesday’s 7½p closing price, via Northland Capital. Expect confirmation from the gem miner today.
Quadrise Fuels International raised £3 million at 3½p on Tuesday. Those who borrowed shares to sell in advance of the fundraising, in a bet that the price would fall, were scrabbling to buy them back yesterday. That, and applause for the extra capital raised, spurred the producer of an alternative to oil by 12.4 per cent to 6p.
EnCore Oil is weighing plans to spin off its exploration assets into a separate AIM-listed company in which it would retain a chunky stake. That would leave Encore freer to concentrate on its Catcher and Cladhan fields in the North Sea. An expectation of a takeover by Premier Oil for 220p a share in the coming few months still holds currency among certain speculators. EnCore eased 3½p to 119¼p, while Premier, one of its partners in the North Sea, fell 56p to £20.20.
PetroNeft rallied 3.6 per cent to 58p, and confirmation should come today that its latest exploration well on Licence 61 at Tomsk Oblast in Siberia would be spudded early next month. Site preparation for Kondrashevskoye No 2 is complete, the rig having been mobilised to its location, and the rig-up is under way. PetroNeft is targeting more than 60 million barrels of oil across three prospects there.
A three-year, £600,000 contract lifted TEG by 9.1 per cent to 28.63p. The composting company will process waste for LondonWaste, which recycles the capital’s rubbish.
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New York
Stocks wavered on Wall Street on the two-year anniversary of the start of the fastest bull market since the 1950s. The Dow Jones industrial average, amid fears about the rising oil price, closed at 12,213.09 points, down only 1.29.