News Column

UK WINNERS & LOSERS: Oil And Gas Stocks Rise Alongside Iraq Tensions

June 13, 2014

James Kemp



LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Friday.

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FTSE 100 - WINNERS

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Tullow Oil, up 1.9%, Royal Dutch Shell, up 0.5% BG Group, up 0.4%, and BP, up 0.4%. The oil and gas companies have risen sharply on the back of a steep increase in the price of oil amid escalating violence in Iraq. In the latest developments, local reports have said that Kurdish military forces have repelled an offensive by radical Sunni militants, who are surging towards Baghdad after having seized cities in the north of the country from fleeing government troops. Brent Oil has risen by more than 4% over the last three days since the situation in Iraq started to rapidly deteriorate, currently trading at a nine-month high of USD112.96 a barrel, having hit a nine-month high of USD114.04 per barrel earlier in the day. West Texas Intermediate oil trades slightly lower Friday, but is still up around 2.5% over the last three days.



Severn Trent, up 1.2%, and United Utilities, up 0.8%. The water companies' shares have risen sharply after Deutsche Bank revised higher its price target for each of them. Deutsche Bank increased Severn Trent's price target to 2,150.00 pence from 2,000.00p, and lifted United Utilities' to 980.00 pence from 900.00p. The bank has a Buy recommendation on both of the companies.

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FTSE 100 - LOSERS

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Persimmon, down 5.4%, Barratt Developments, down 4.3%, British Land, down 3.4%, Land Securities Group, down 3.3%, and Hammerson, down 2.9%. The housebuilders and real estate investment trusts have been hit by comments made by Bank of England Governor Mark Carney late on Thursday. Speaking alongside Chancellor George Osborne at the annual Mansion House dinner, the BoE governor said that the first UK interest rate rise "could happen sooner than markets currently expect." REITs are particularly sensitive to interest rate expectations. Meanwhile, Chancellor Osborne said the BoE will be given formal powers to rein-in mortgage lending, saying that "if London prices were to continue growing at these rates, that would be too fast for comfort." While the timing of the first interest rate rise is debatable, depending on whether the BoE can slow house price inflation with such macro-prudential measures alone, it seems likely that times will get a little tougher for the housebuilders in the near-term.



EasyJet, down 4%, and International Consolidated Airlines Group, down 3.7%. The heavy fuel consumers are down as the price of oil shoots higher.

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FTSE 250 - WINNERS

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Petra Diamonds, up 6.3%. The diamond mining company has recovered another exceptional 122.52 carat blue diamond at the Cullinan mine in South Africa. It said the stone will require further analysis in order to assess its potential value, but once this is completed, the company will make a decision on its sale plan for the stone. It said that the diamond will therefore not be sold until after the end of the company's current financial year, which ends on June 30.



Afren, up 1.1%, andPremier Oil, up 1.1%. The oil and gas companies are up on the back of the increasing price of oil.



EnQuest, up 0.1%. The oil and gas development and production company has expanded its footprint in Malaysia through the acquisition of an operated interest in the producing Seligi oil field and PM8 production sharing contract, located offshore, from ExxonMobil Exploration and Production Malaysia Inc for USD67 million in cash. It said that on completion of the acquisition it will contribute approximately 5,000 barrels of oil equivalent per day of net production and 11.0 barrels of oil equivalent of net 2P reserves attributable to EnQuest. Under the deal, EnQuest will take operatorship for the interest from ExxonMobil, while EnQuest and Petronas Carigali Sdn Bhd will each hold a 50% participating interest.

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FTSE 250 - LOSERS

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Taylor Wimpey, down 6.2%, Berkeley Group Holdings, down 4.8%, Bovis Homes, down 4.3%, Great Portland Estates, down 3.9%, andBellway, down 3.7%. The housebuilders and real estate investment trusts are down on the back of the comments made by Carney and Osborne on Thursday.



Thomas Cook Group, down 5.3%. The travel operator is down in light of the higher oil price.

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AIM ALL-SHARE - WINNERS

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SyQic, up 41%. The digital media company said its core mobile streaming business YooMob saw revenue of GBP2.0 million in the first quarter to end-March. It said the YooMob business saw encouraging trading in the two months following the quarter end, with total revenue of GBP1.6 million in April and May, and SyQic expects the "upward trend" in revenue to continue during the rest of the year.



Cientifica, up 7.1%. The company said that it has entered into a development agreement with UK based Perpetuus Carbon Group in the hope of speeding up the production of its graphene products. Perpetuus produces nano surface modified graphenes. Under the collaboration Perpetuus will provide technical support for Cientifica's product development to bring them to market quicker. No financial details were disclosed.

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AIM ALL-SHARE - LOSERS

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Tower Resources, off 63%. The oil and gas exploration company said it has failed to find hydrocarbons in early targets at the Welwitschia-1A well on the PEL0010 licence, offshore Namibia, and has had to stop drilling deeper at the well due to spiralling costs. It said the well reached its total depth of 2,454 metres and logging evaluations have shown that the Palaeocene, Maastrichtian and upper Campanian section reservoirs were less well-developed than expected, and no hydrocarbons were encountered at the site. The company and its partners on the site have now agreed not to drill the the site further, due to the significantly higher costs that would ensue, and are currently evaluating the information and its implications for the block as a whole. The Welwitschia-1A well is being plugged and abandoned.



ViaLogy, down 30%. ViaLogy has become a molecular diagnostic company after buying Premaitha for GBP10.5 million, although it had to write down the value of the energy services business it is trying to offload because it is taking longer than it hoped to find a "suitable" partner for that business. It said it would pay for Premaitha by issuing 95.5 million new shares at 11 pence each, and that it had raised GBP6.5 million by placing 59.1 million new shares at the same price. It also launched an open offer of up to 6.7 million more new shares at the same price. The funds from the placing and open offer will be used to develop and commercialise the IONA test. It is also planning a share consolidation, because it thinks it will benefit from having fewer shares in issue and trading in pence rather than fractions of a pence. If approved by shareholders, it will convert every 100 existing shares into one new share. Shares in ViaLogy, which will change its name to Premaitha Health, are quoted at 0.1325 pence pre-consolidation.



Transense Technologies, down 15%. The company, which makes sensors like tyre pressure sensors for cars and trucks, said it now expects to post a loss before interest, tax, depreciation and amortisation for its current financial year, albeit a narrower loss than last year, after it experienced delays in getting some new orders. It said it expects its revenue in the year to end-June to be no less that GBP3.5 million, up from GBP1.5 million a year earlier, but that is lower that it had expected when it put out its interim results in February. The company had previously expected to breakeven at the Ebitda level in the current financial year, but said the revenue shortfall compared with previous expectations means it will now make a loss.

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Source: Alliance News


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