Market Movements Focus On Oil and Gas, With Insurance Also In Play

on Sep 17, 2012

Falkland Oil & Gas, the explorer listed on the LSE’s AIM – alternative listing – bourse, couldn’t hide its disappointment in advising on 17 September that, whilst it’s discovered gas at its Loligo offshore prospect, there hasn’t been a whiff of oil. The market reflected the prospector’s disappointment, marking it down 30 percent – from 90 pence to a seven-month low of 56 – following the news that an already behind-schedule programme had come up short.

Whilst there’s money in gas, getting it profitably away from the Falklands – given the difficulty in using an Argentinian port facility and with no LNG (liquefied natural gas) facility in the region – is a slim prospect and Falkland Oil & Gas has effectively flagged it away. Attention’s now being given to the company’s Scotia prospect.
!m[](/uploads/story/383/thumbs/pic1_inline.png)CEO chief executive Tim Bushell put on a brave face, saying: “With our partners Noble Energy and Edison, we have the technical resources and funding in place to carry out substantial 3D surveys, followed by further drilling in 2014.”

And the news from fellow Falklands prospector Desire Petroleum hasn’t been much better, with the company announcing only that it’s managed to stem its previous losses –nearly $40 million in fiscal 2011 – by winding back its prospecting activities around the disputed islands. It spent just $1.5 million in H1 of this year supporting its four percent stake in the yielding Sea Lion prospect. Desire’s shares dropped 1.25 pence – to 24p – on the news.

Meanwhile, FTSE 100 heavyweight Shell Royal Dutch saw its share price clipped nine pence – down to 2,317.75 – on its announcement that damage to its Arctic Challenger barge has lowered the boom on further prospecting off the Alaskan coast for the balance of this season. BP had already called time on its activities, with winter and the ice-sheet fast encroaching.

Elsewhere on the bourses, Espirito Santo’s Joy Ferneyhough recalibrated Admiral Group to a ‘sell’, remarking that, with the insurer’s “revenue and margins under pressure this would appear to be a good time to take profits”. And down it went – Admiral’s shares shed 22 pence on the assessment, to be 1100.5 at the close.
Indeed, the FTSE 100 as a whole was off 20.73 points for the day – to close at 5894.82 – following bad press for Royal Bank of Scotland. Investec analyst and banking expert Ian Gordon had earlier downgraded the troubled bank from buy to hold and on 17 September went to sell, at 245p if it can be had. Gordon’s viewpoint: “the risk:reward is disproportionately skewed to the downside”. The bailed-out bank, in which the UK government still holds a majority stake, slid five pence to 273.9.
And finally, over on the FTSE 250, Africa-focused oil & gas prospector Ophir Energy took a hit on news that the Tanzanian government is planning to review all extant exploration contracts by year’s end. Perhaps a little spooked as to the implications, the market downgraded Ophir 28.5 pence, to 612.75.


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