Shale explorers rocked after freeze on fracking
SHARES in shale gas explorers were hammered after ministers imposed a moratorium on fracking, ruling that it was too disruptive to local communities.
Formally known as hydraulic fracturing, the process involves blasting at high pressure a mixture of sand, chemicals and water into the ground to release gas trapped in shale rock.
It came after exploration firm Cuadrilla triggered multiple small earthquakes in Lancashire earlier this year that damaged property. The consequences were deemed to be ‘unacceptable’ to those living nearby.
The temporary ban will stand until ‘compelling new evidence’ is provided, and no new licences will be issued in the meantime.
Cuadrilla’s biggest shareholder, AJ Lucas, fell 23.6pc on the stock market in Australia.
Although Cuadrilla and another major shale player, Sir Jim Ratcliffe’s chemical giant Ineos, are not listed, smaller groups Egdon
Resources and I Gas plummeted in London. IGas (down 11pc, or 4p, to 32.25p) and Egdon (down 19.5pc, or 0.85p, to 3.5p) were both at pains to stress that they are not reliant on fracking and that their non-fracking-related business will carry on as normal.
Somewhat jumping on the bandwagon, AIM tiddler Union Jack
Oil rose 8.3pc, or 0.02p, to 0.23p, after telling the stock market it has ‘no intent to engage’ in fracking, neither now nor in the future.
The FTSE 100 edged 0.9pc higher, up 67.27 points, to 7369.69, while the FTSE 250 rose 0.5pc, or 90.95 points, to close at 20249.72.
Troubled construction contractor Kier Group plunged 5.5pc, or 6.4p, to 111p, following weekend reports that lenders are trying to pass on the company’s debt to hedge funds at knockdown prices. This is being interpreted as a signal that the firm’s lenders believe Kier’s future looks less secure, as selling debt to hedge funds would limit their losses if it collapsed.
A stormy third quarter knocked Footsie-listed insurer Hiscox, which said it has put aside £128m to cover claims for damage from Hurricane Dorian and typhoons Faxai and Hagibis, sending shares down 2.4pc, or 35p, to 1440p.
Upbeat broker notes gave a boost to Premier Inn-owner Whitbread and mid-cap retailer Pets
At Home. Peel Hunt started coverage on Footsie-listed Whitbread with a ‘buy’ rating, praising its growth strategy and pointing to the potential to build a large hotel network in Germany.
Whitbread closed 1.2pc higher, up 51p, at 4175p.
And Liberum put a ‘buy’ stamp on Pets At Home (up 3.4pc, or 6.8p, to 208.6p) for the first time in three years, with analysts signalling their approval of a strategic overhaul and flagging that a recent fall in the share price could be a good bargain ahead of firsthalf results later this month, which they predict will be strong.
Elsewhere on the FTSE250, oil and gas group Energean was on the up after good results from tests of a gas well off the coast of Israel, which is next to its mammoth Karish gas project.
Shares in Mediterranean focused Energean, which is hoping to extend the Karish field to include the new area it has tested, lifted 1pc, or 9p, to 909p.
British co-working office provider IWG (up 3.2pc, or 12.3p, to 395.3p) agreed to sell its Swiss business to private banking group J. Safra Group and property investor P. Peress Group.
Over on AIM, there was an investor exodus at cybersecurity software maker Defenx after it announced plans to quit the junior market, sending shares down 72.7pc, or 2p, to 0.75p. And selfstorage group Lok’n’Store rose 5.8pc, or 32p, to 580p after it beefed up its annual dividend by 9pc to 12p per share. Revenue rose 11pc in the year ended July 31.