MARKET REPORT: Gulf Keystone Petroleum's shares rise after positive well test
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UPDATED:
21:09 GMT, 23 April 2012
You need nerves of steel to wheel and deal
in the seat-of-your pants junior oil market.
Punters were as happy as Larry as shares of
Kurdistan-focused explorer Gulf Keystone
Petroleum, which have traded between wide
extremes of 5p and 465p over the past few
years, gushed to 239p before closing 24p
higher at 235p following a positive well test.
The company revealed that the testing programme
on Shaikan-4 in the Kurdistan
region of Iraq has been completed and results
are better than had been expected. It
achieved total maximum aggregate flow
rates of 24,000 barrels of oil per day.
Broker Canaccord Genuity upgraded to hold
from sell, saying it was a positive development
especially given the single 14,000 barrels of oil
per day flow rate achieved from Sargelu. This
is the largest test result to date.
It helped the volatile stock recover from last
week’s depression caused by ExxonMobil’s
barring from the next Iraqi bid round. Optimists
now hope that Exxon launches a bid for
Gulf Keystone as a possible way into Iraq.
Afren, which last week announced a significant
oil find in Kurdistan, shed 9.7p to 140.3p
on profit-taking.
Following last week’s spectacular doubling
of its share price to 130p, Borders & Southern
desperately needed to report that its
Darwin exploration well in the Falklands had
struck oil. Oops! The eagerly awaited report
showed no traces of black gold but only a
‘significant gas condensate discovery’.
The smell of burnt fingers immediately
wafted around dealing rooms as the shares
crashed to 85.75p before ending 41.5p or 32 per cent lower at 89.5p. Punters moaned that the gas
discovery is technical and it could be a long
time before the find is commercialised. Events
over the past week or so has definitely left a
nasty smell. Broker Merchant Securities
added: ‘The reality unfortunately didn’t
match the speculation. There’s no liquid richness
commentary, no scale data, and no mention
of a sidetrack. In our view, the thing for
investors to do now is to switch into Falkland
Oil & Gas (13.75p easier at 80p), which at
least still has the chance of encountering oil.’
Other highly speculative Falkland stocks
moved south with Rockhopper Exploration
down 10.25p at 341.5p and Desire Petroleum
1.75p cheaper at 27.75p
.
Elsewhere, dealers needed a stiffer upper lip
on St George’s Day as stockmarkets on both
sides of the Atlantic fell sharply as political
turmoil in the eurozone prompted nervous
selling. The Footsie lost 106.58 points to
5,665.57 and the FTSE 250 dropped 263.23 to
11,181.62. There are growing fears that should
French president Nicolas Sarkozy lose the
French election to socialist leader Francois
Hollande, it will shatter his accord with German
chancellor, Angela Merkel, and destabalise
Europe.
Adding to the overall uncertainty was political
instability in Holland and worries that
the Netherlands could lose its triple A credit
rating after the Dutch cabinet resigned.
Prime minister Mark Rutte failed to gain
support for €14billion to €16billion worth of budget
cuts. An election could now be on the cards.
Wall Street didn’t help London’s cause,
opening around 170 points lower. Retailing
giant Wal-Mart, which owns Asda, featured
with an early fall of 5 per cent following allegations
in the US press that Wal-Mart’s representatives
in Mexico bribed local officials to get
stores opened faster.
Rupert Murdoch’s satellite TV group
BSkyB resisted the malaise, adding 4.5p to
679p. Buyers nibbled away following a report
that Al Jazeera would not be bidding for
rights to show Premiership football.
Reflecting the weaker market trend, insurance
giant Prudential declined 37p to 725.5p.
Selling ahead of Friday’s AGM and firstquarter
figures dragged Barclays 9p lower to
204.55p. Renewed selling following its embarrassing
accounting cock-up saw fashion
retailer SuperGroup touch 325.3p and close
16.8p down at 335p. Broker Singer Capital
reckons until confidence in forecasts and
management’s ability to deliver on reliable
expectations materially improves the stock
has become uninvestable. Its target price is
320p.
Rolls-Royce shed 16.5p to 815.5p despite
the group being awarded a 371million contract
with the US Department of Defence for 268
AE 1107C engines for US Marine Corps and
Air Force V-22 aircraft. In the first year, the
group will deliver 70 engines valued at 94million.
Shares of machine-gun maker Manroy,
11.5p off at 83.5p, were shot down by the
company’s admission it has failed to confirm
an 8million contract.
The delay in securing the deal will mean its
2012 results would be hit. Revenues for the
year to end-September 2012 was now
expected to be in the region of 7.5million against
market expectations of 11.3million.
- Analysts reckon it’s not a matter of if, but
when, Apple bids for Imagination Technologies
– 9p easier at 673.5p. The company designs
chips for the US giant’s mobile devices and is
an obvious target. Meanwhile, a further
licence agreement with Qualcomm
Incorporated has been signed. Peel Hunt says
further engagement with Qualcomm, its
largest competitor in graphics is positive. The
broker’s target price is 815p.
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- MARKET REPORT: Gulf Keystone is one in a billion
- MARKET REPORT: Gulf Keystone Petroleum gushes to 52-week peak on Exxon bid talk
- MARKET REPORT: A big headache for Shire"s shares
- Newspaper share tips: Housebuilding sector, Catlin, Gulf Keystone and Laird.