Market report: Wednesday close

By Mickey Clark for MailOnline
Updated: 11:55 EDT, 23 August 2006

SHARES in Australian-based Hardman Resources took a hit overnight in Australia, and fell a further 5p to 60p when trading resumed in London today, on news that oil reserves at the vast Chinguetti field in Mauritania may have to be downgraded by between 25% and 50%.

Chinguetti is estimated to have proven and probable reserves of 123m barrels. It came on stream in February and was soon pumping about 70,000 barrels a day. Output has since declined to between 32,000 and 38,000 barrels daily.

Now it emerges that John Doran, chief executive of Roc Oil, up 1p at 164½p, which holds a 3.2% stake in the project, would not be surprised if the Chinguetti reserves estimate has to be halved.

Aim-listed Hardman owns 19% of the Chinguetti consortium. Its project partners include Woodside Petroleum, with a 48% stake, our own BG, down 1½p at 693½p, (10.2%) and Premier Oil, 56p better at 1041½p, with (8%).

Brokers were trying to put a positive slant on things today. Bridgewell Securities stressed Chinguetti's oil-in-place estimate is likely to remain unchanged.

Rival KBC Peel Hunt warned it is unlikely the reserves will turn out to be better than its own running estimate of 90m barrels, with possibly more wells needed to extract them. It reckons the overnight fall in the Hardman share price in Australia was inevitable, but believes the bad news is now factored in.

Elsewhere, investors had to face up to another lacklustre performance that left shares drifting in thin trading. The FTSE 100 index fell 42.6 points to 5,860.0, weighed down by a long list of exdividends that included DSG International, down 6p at 195¼p; Scottish and Southern Energy, 26p lower at 1188p; ICI, 5¾p cheaper at 360½p; Pearson, 23p better at 737½p; and merchant bank Schroders, 22p lighter at 903p.

Anglo-Australian logistics group Brambles Industries topped the FTSE 100 risers with a jump of 20¼p at 447¼p after reporting a big profits increase and good times ahead after the near-completion of a massive disposals programme.

The group, reporting a 16% improvement in annual post-tax net profit to $362.6m (£191.6m), also announced that it is launching its CHEP pallet-leasing unit in China.

Chief executive David Turner said: 'The Chinese opportunity is really early. We are putting a management team on the ground, we've got the top four or five people in place and we are talking to customers.'

Brambles has sold off $3.6bn worth of businesses, resulting in a one-off profit of $1.07bn. This has allowed the firm to concentrate on CHEP and its documents storage business, Recall.

The group has still to complete the sale of its waste-disposal business Cleanaway UK to France's Veolia. Turner is confident of good things ahead, with continued growth and improved margins.

Retailer Blacks Leisure's second profits warning in a month has not gone down well, the shares tumbling 79½p to 372½p. Broker Seymour Pierce said it left the group with a 'huge credibility issue'.

The shortfall cannot be blamed entirely on sales but is also linked to higher spending on the internet and new stores. On the plus side, the broker points out that Blacks is the market leader in the outdoor field, and could attract a bidder.

Aim-listed Galahad Gold firmed 0.38p to 9.62p on the back of a positive drilling report from Northern Dynasty Minerals, in which it holds a 20.2% stake. Assay results for the first drill holes at Pebble East in Alaska indicates higher grades than calculated of copper, gold and molybdenum.

Another gold miner on the move was Ariana Resources, up 1p at 13½p.