Oil services firm hit by slide in price of crude

THE slump in crude oil prices may have been a boon at the pump for long-suffering motorists, but it is starting to hit companies in the drilling industry.

Shares in Hunting dropped 6pc after it said it expects companies that work in the booming US shale market to put off spending on some projects in early 2019.

The price plunge could hit firms’ short-term budgets, Hunting said, while companies are also plagued by congestion in the pipes that transport shale oil and gas to the Gulf Coast.

FTSE250-listed Hunting, which supplies equipment to oil and gas companies, said its results for January to November are in line with management expectations.

The pessimism in Hunting’s trading update pushed down its FTSE 100-listed peer Wood Group, the biggest FTSE 100 faller, which put out a similarly wary update last week. Wood Group said oil price volatility could slow the pace at which it wins contracts and that its earnings could be at the lower end of expectations. Shares in Hunting fell 5pc, or 25.5p, to 488p, while Wood Group was down 5.9pc, or 33.8p, to 534p.

The price of Brent crude fell more than 25pc in October and November as global supplies rose, stoking fears of a glut.

Meanwhile, drug maker Shire was a drag on the Footsie after ratings agency Moody’s downgraded the company that is taking it over in a whopping £44bn deal. Moody’s said Takeda’s acquisition of Shire, due to complete early next year, would cause the Japanese pharma group’s debt to increase around sixfold.

Shire dropped 3pc, or 140.5p, to 4532.5p as a result.

But Wood Group and Shire were not the only companies weighing on the Footsie, as the benchmark index stayed in the red, closing down 1pc, or 71.93 points, at 6,773.24 points yesterday.

Shares in AIM-quoted Asos fell 40pc in morning trading after it warned it had seen a significant deterioration in sales in November. It closed down 37.6pc, or 1572p, to 2614p, and dragged down fellow AIM retailers Boohoo and Joules. Boohoo shares shed 13.7pc, or 25.15p, to close down at 157.85p and Joules shares dropped 7.5pc, or 17p, to 210p. High Street brands suffered as Next shares lost 4.6pc, or 201p, to 4137p, while

Marks & Spencer’s stock fell 4.6pc, or 12.1p, to 251.3p.

Across the pond, Wall Street fell deeper into correction territory, adding to Friday’s losses.

Worries that a quarter of US government operations could shut down on Friday at midnight if the White House and politicians can’t agree a spending plan added to jitters about US-China trade and the global economy.

The S&P 500 and Nasdaq Composite opened at eight-month lows, down 2.1pc at 2545.90, and 2.3pc at 6753.73 points respectively, and the Dow Jones Industrial Average fell 2.1pc to 23,592.98.

Mining stocks, on the other hand, were a bright spot for the London market.

BHP was the top FTSE riser yesterday, up 2.7pc, or 43.2p, to 1659.8p, after it said it would deliver on its promise to hand back the proceeds to shareholders of its £8.3bn sale of US shale assets to BP.

It announced a special dividend of 113p per share that will be paid to investors next month and said it had completed a £4.1bn off-market share buyback.

But it wasn’t all good news for mining firms as Acacia Mining shed 6.3pc, or 12.15p, to 180.55p, after reports on Friday that the Serious Fraud Office is investigating the company over allegations of corruption in Tanzania.

The firm has said it is not aware of an SFO probe, while the SFO said it is aware of the allegations but declined to comment further.