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Yesterday's trading: Chinese whisper fuels Gulfsands

By Geoff Foster for MailOnline
Updated: 05:21 EDT, 15 September 2009

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Chinese takeaway rumours continued to get punters in Gulfsands Petroleum hot under the collar.

Geoff Foster: Profit-taking threatened to derail the Footsie.

Shares in the oil explorer gushed to 260p on revived talk of a hostile £386m or 325p-a-share cash offer from Chinese state-owned oil company Sinochem, before closing 5.25p better at 254.5p.

Every man and his dog has been expecting a bid for Gulfsands after its 50-50 joint venture partner in Khurbet East in Syria, Emerald Energy, was swallowed by the Chinese in a £532m cash deal. Even though Gulfsands has denied that it has held talks with Sinochem and co-founders John Dorrier and David Decort sold shares last week, speculation has intensified.

Dorrier and DeCort's sales still left them holding 7.64% and 3.58% respectively of the company's equity. They apparently agreed to release some stock to satisfy investor demand. They still stand to trouser around £26m and £14m should Sinochem eventually put 325p a share on the table.

Gulfsands is generating cash from its oil production, with analysts pencilling in around £38m of cash flow after tax from the full-year from Khurbet. It is debt-free and has major interests in Iraq and the Gulf of Mexico.

Faroe Petroleum jumped 18p to 104.5p on news it has discovered gas at its Glenlivet exploration well, west of the Shetlands. It is the company's first gas find in the Atlantic Margin, and the drilling of a potential sidetrack well was being considered. It has said it plans to drill five wells in the Atlantic Margin.

Early profit-taking dragged the Footsie 48 points lower before a late rally left the close 7.38 points higher at 5,018.85. Wall Street lost 24 points at the outset ahead of a speech by President Barack Obama at the New York Stock Exchange on financial reform. It marks the one-year anniversary of Lehman Brothers

filing for bankruptcy, the pivotal event that triggered the global credit crunch and a market crash which saw the Dow Jones index plummet 5,000 points.

Buying on reports of a pending upbeat circular lifted defence giant BAE Systems 7.1p to 339.75p.

After Morgan Stanley raised its target price 36% to 380p, retailing giant Marks & Spencer put on 3.5p to 373.6p. The broker said the upgrade reflected the less-negativethanexpected pension position reported at the full-year results and a better like-for-like sales and gross margin outlook. Industrial engineer IMI soared 18.3p to 474.6p after Citigroup upgraded to buy from hold and more-than-doubled its target price to 550p from 270p. It sees further significant upside potential. Recent strong first-half results suggests that demand is stabilising.

British generic drugs supplier Goldshield rose 20p to 405p following the announcement of a possible offer from AIT Investments. The newly incorporated company formed by the Fuhrer family, who own and control the Neopharm group of pharma and healthcare companies, will make a cash offer in conjunction with Ajit Patel, a former chief executive who stepped down in 2007.

Britain's biggest coal miner UK Coal lost 3p to 120.25n whispers of an imminent rights issue at 70p. A huge writedown in the valuation of land owned by UK Coal has led to £80m losses in the first-half of the year, mounting debts and urgent talks with its lenders.

Expect Circle Oil, 0.5p easier at 31.75p, to test the year's peak of 36.5p after a big seller was cleared out. Sareum Holdings, the specialist cancer drug discovery company, eased 0.015p to 0.3p. The company will be making presentations at three biotech conferences over the next two months and rumours continue to circulate that there could soon be a tie-up with one of the major pharmaceutical groups by the first-quarter of 2010.

Satisfactory interims left Zenergy Power 3.5p better at 130p. Broker Panmure Gordon's target price is 220p as it expects further orders to be announced in the second half.

Following a £800,000 share placing undertaken by shop broker Alexander David Securities, Ariana Resources edged up to 4.625p. Cash raised will help fund exploration in Turkey.

Healthcare Locums, the largest specialist health and social care staffing company, advanced 12.5p to a record close of 249.5p on further consideration of last week's excellent interim results.

News of two acquisitions which accompanied maiden full-year results left Scientific Digital Imaging 2p dearer at 22p.

City of London Investments put on 6.5p to 261.5p following good results. Evolution Securities is a buyer because the group currently trades at a significant discount to the wider asset management peer group.

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