Oil giants spurt at cost cutting
SLASHING costs in the oil sector is the name of the game and news Royal Dutch Shell is planning a further slash and burn programme came just as US oil services group Halliburton announced its own cost cutting had paid off in the shape of better than expected quarterly profit.
With the oil price languishing at around $56 a barrel, Halliburton’s net profit slumped 93pc to £34m but this was better than analysts expected after drastic cost and job cuts and the shares rose nearly 3pc.
In London shares in Royal Dutch Shell and BG advanced 8.5p to 1838p and 10.5p to 1080p respectively after expectations that Shell will announce further cost cutting and ‘billions’ of savings from its £55bn takeover of BG. Shell will issue its interim results next Thursday and may cut its spending by several billions having already announced £21bn of capital expenditure reductions.
It was reported that Shell has briefed analysts its BG deal could mean further savings for the combined group and investors breathed a sigh of relief yesterday, pushing the shares higher.
The reopening of Greek banks and relief Athens made a debt repayment helped keep shares in London and across Europe in the black. The FTSE 100 gained 13.61 points to 6788.69 and the FTSE 250 rose 25.51 points to 17781.42.
Gold miners were out of favour. The gold price tumbled yesterday to a five-year low after the Chinese government released official gold reserve figures that were lower than expected. The strength of the US dollar and the prospect of interest rate rises has led to a reluctance by investors to treat gold as a safe haven. It plummeted to $1088 an ounce.
Footsie gold producer Randgold Resources took the wooden spoon, down 187p to 3817p and Mexican precious metals miner Fresnillo fell 29p to 629p. The mid-cap gold specialists were also weaker with Egyptian focused Centamin down 5.35p to 53.6p and Acacia Mining 38p worse off at 239p. Platinum miner Lonmin lost 3.55p to 77.65p as that metal price collapsed too.
Retailer Sports Direct was top of the blue chips after analysts at Exane BNP Paribas raised their target price following its strong full year results last week. It advanced 25.5p to 772.5p.
Citi’s scribblers gave the thumbs up to HSBC and raised its recommendation to buy. Citi’s experts predict its capital ratios will improve after it sells off a number of assets. Citi also reckon its top brass chief executive Stuart Gulliver and chairman Douglas Flint will be facing further pressure and if Flint leaves and is replaced next year this could herald a big restructuring. HSBC shares climbed 6.5p to 586.7p.
Under pressure Rolls-Royce, after a string of profit warnings, said its aero-engine business won two contracts totalling £1.4bn and the engineer’s shares drove up 3p to 783p.
Reports that Pearson could flog the Financial Times didn’t lift its share price and it eased 20p to 1255p.
Shares in Tullow Oil lost more than 5pc after it said gas exports from its Jubilee Field in Ghana had been suspended due to technical problems. It will resume by the middle of next month and there has been no effect on the resources in the field.
But Tullow said it will review its 2015 production forecast for Jubilee and give an update at its half yearly results next week and shares declined 14.5p to 267.1p.
Haulage firm Wincanton won a contract with BAE Systems and shares drove up 7.75p to 192p.
Analysts at Merrill Lynch have an appetite for online takeaway ordering service Just Eat. They expect its results to be good next month and the shares gobbled up 12p to 449.9p.
Shares remain suspended in oil firm Afren. It is close to the end of this sorry tale with Friday the day its refinancing goes to the vote. Shares had tumbled 99pc and are suspended at 1.78p. It is desperate to get its debt-for-equity swap away which will dilute the interests of shareholders to just 11pc. More than 100 small shareholders have written to City regulator Financial Conduct Authority to investigate ‘ potential collusion with certain bondholders’.
Rambler Metals and Mining rose 1.75p to 11.50p after it announced the lengthening of the life of its Ming Mine in Canada to 21 years which will see throughput double to 1250 metric tonnes a day.
AIM-listed Cluff Natural Resources has made ‘significant’ progress with US group Halliburton for its planned Underground Coal Gasification project in the North Sea. Plans are being drawn up to drill one or more wells at Cluff ’s Southern North Sea licences. Cluff announced a memorandum of understanding with Halliburton in February. Brokers said yesterday’s update suggested the parties ‘ are making good progress under its terms’. Cluff gained 0.12p to 3.38p. ÷ DAVID Lenigas is currently promoting another oil tiddler he’s involved with on his Twitter account. Leni Gas Cuba has bought a 5pc stake in Petro Australis, which is looking for oil in onshore north west Cuba. Petro Australis secured a 40pc share in an onshore block with Cuba Petróleo Union and is awaiting final approvals from the Cuban Government for the site. If Lenigas lists Leni Gas Cuba on AIM, his fans will no doubt follow and invest.