News Column

Tullow Oil dips after $415m write-off but FTSE edges higher

July 2, 2014

Nick Fletcher, theguardian.com



In a fairly bubbly market for the second day running, Tullow Oil is on the slide.

The oil explorer and producer said it was writing off $415m after disappointing results in Mauritania, Ethopia and Norway. It will also incur a loss on disposal of $115m related to a project in Uganda. It kept its full year production guidance of 79,000 to 85,000 barrels of oil equivalent a day, and said 2014 half year profits are expected to be in line with forecasts of $650m. Chief executive Aidan Heavey said:

We are well funded following our second bond issue and we are making steady progress with our asset disposal programme.

With potential basin-opening wells across the portfolio coming up in the second half of the year and strong revenue and cash flow, Tullow is in a strong position for the remainder of this year and into 2015.

Despite this optimism, the company's shares have slipped 5p to 850p. Oriel Securities said:

Given that the company had its capital markets day recently, there was not much new on the operational front. Overall however we see the update slightly on the negative side, largely due to production being below the full year 2014 guidance range, suggesting to us that the full year production is likely to be towards the low end of guidance.

But Liberum and Westhouse Securities both kept their buy ratings on the shares.

Overall the FTSE 100 has added 13.05 points to 6815.97 after a strong performance in the US following reasonable manufacturing data from around the world. Rebecca O'Keeffe at Interactive Investor said:

Positive manufacturing data from both China and the US helped propel US stocks to new highs yesterday afternoon, with Asian markets following up with gains and European markets cautiously rising this morning. In an environment where central bank policy is making it incredibly difficult to be short stocks, equities continue to float on a sea of confidence and liquidity. As the direct beneficiaries of central bank and government employment policy, smaller companies lead the way, enjoying increased support and growing confidence.

Among the risers, BG was 12p better at 12.59 after Canaccord raised its target price from 12.50 to 14.50.

A number of companies saw their shares go ex-dividend. These included Royal Mail, down 10.8p at 480.4p, Burberry, 29p lower at 14.50, and Babcock International, off 17p at 11.47.

Finally, it has been a bad few days for Autonomy and its associates.

The former Cambridge software star was bought by Hewlett-Packard, which subsequently faced legal action over the deal. But on Friday reports suggested HP had settled the claims, with the parties set to turn their attention on former Autonomy bosses.

Now a spin off from Autonomy, Blinkx, has issued a profit warning and seen its shares tumble 44% or 29p to 36.75p.

The company, an internet video search specialist, said in the last three months it had seen lower than forecast demand with a corresponding shortfall in revenues and earnings. It said the shortfall was exaggerated towards the end of the quarter, adding:

We attribute this performance to industry-wide issues of efficiency and effectiveness, which in our case was compounded by the lingering effects of the disparaging blog about the company.

This resulted in a slower than expected return of demand, despite earlier signs of normalisation.

The blog post came out in January and the company immediately denied the claims and said there was no change in its outlook.


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Source: Guardian Web


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