FTSE in-depth: Tullow still on menu
Tullow Oilgushed 26p to 1182p on Chinese takeaway speculation.
Word is China National Offshore Oil Corporation (CNOC), China's biggest offshore oil producer, is lining up a knock-out cash offer worth up to £17bn, or £20 a share, for the oil and gas explorer which has been heavily sold of late after being told to shut down all of its activities in Uganda.
Tullow struck a £950m deal in July to buy some Ugandan assets from fellow explorer Heritage Oil & Gas. But there has since been a problem.
Heritage had an outstanding tax dispute with the Ugandan government and the authorities have now effectively frozen Tullow's operations until the tax row is solved. Analysts called it a 'schoolboy error' on Tullow's part.
The dispute puts on hold a previously agreed partnership in Uganda with CNOC and Total, which again cannot be approved until the tax issues are resolved. CNOC is super confident the issues can be quickly sorted out with the Ugandan government and is ready to bid for Tullow lock, stock and barrel.
CNOC recently admitted that overseas acquisitions and discoveries at home will drive its future growth. Chairman Fu Chengyu said it is concentrating its efforts on Africa and South America. Driven by China's demand for energy and resources, it is hunting aggressively for quality assets around the globe.
Meanwhile, Goldman Sachs yesterday advised clients to buy Tullow up to £17.
Heritage Oil added 3.6p to 333.4p after Oriel upgraded to buy from hold because of prospects in Kurdistan.
In a lower league, Oilex soared 11.25p, or 140% to 19.25p after the Australian-based oil and gas explorer revealed that its exploration-block in India has significantly upgraded its gas reserves. The Cambay field in Gujarat in the West of India holds 248bn cubic feet of gas with a 90% certainty of being produced.
An upgrade of its Namibian resource potential lifted Chariot Oil & Gas 15p to 134p.
With Wall Street closed for Labor Day, many dealers in London just sat on their hands. The overall volume of business was small but further consideration of Friday's better-than- expected US jobs numbers helped the Footsie amble forward 11.04 points more to 5,439.19.
Argos-to-Homebase retailer Home Retail added 5.8p to 227.1p on a Seymour Pierce upgrade to hold from sell. The retailer is still in grave danger of being kicked out of the Footsie when the FTSE Steering Committee holds its quarterly review meeting tomorrow. Industrial engineer Weir Group, 23p off at 1283p, is tipped for promotion.
Intercontinental Hotels rose 11p to 1,073p after Nomura Code advised clients to buy up to 1,315p. IHG trades at a 30% discount to US operator peers, having been de-rated by 20% in the last quarter. Oversold.
Conveyor belt manufacturer Fenner gained 7.5p at 218.5p following an upbeat pre-close trading statement. FinnCap is bullish and says the group is experiencing a decent recovery in its underlying markets and volume growth coupled with internal improvements are delivering margin expansion.
Shares of Aqua Bounty Technologies soared 7.25p, or 46%, to 23p after American scientists declared that its genetically-engineered salmon, called AquAdvantage, are as safe to eat as normal Atlantic salmon. The fish are genetically altered to grow twice as fast as normal salmon and could be on US dinner tables within two to three years.
The US Food & Drug Administration is due to make a final decision this month on whether to approve the GM salmon. If the regulator does say yes, ABT's shares should rocket.
Biotech company Silence Therapeutics, which has a research partnership with Astra-Zeneca, leapt 5.51p to 12.75p after receiving a bid approach.
Forbidden Technologies, the developer of the market-leading Cloud video platform FORscene, put on 3.5p to 24.5p. Buyers responded to news that it has a demonstration of its FORscene software up and running on the Nokia N900 Smartphone.
After broker Canaccord lifted its target price to 200p from 120p, Bellzone Mining rose 3p to 65p. The upgrade came after the iron ore development company in Guinea announced a 56.5% increase in total magnetite resource from 2.4bn tonnes to 3.74bn tonnes on the central zone at its Kalia mine.
Mariana Resources improved 1.25p to 25.75p on news that it has started resource drilling at its Las Calandrias gold discovery in the prospective Patagonia region in Argentina.
Scratching around for ideas, punters chased pest control company Rentokil Initial 2.3p higher to 101.9p. Reports of a 71% increase in bed bug infestation since 2001 suggests the group's £300-plus VAT treatment package will be in big demand in the coming months. Turnover swelled to 13m as revived rumours of a possible breakup bid, worth 140p a share, from private equity players also did the rounds.
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