FTSE in-depth: Falkland fever after oil strike

 

Falkland oil fever hit the City once again after Rockhopper Exploration, the Wiltshirebased company which made the first significant oil discovery in Falkland waters last May, announced another significant find at its Sea Lion well.

Port Stanley, Falklands

Port Stanley: Oil finds in Falklands waters have seen a series of share price spikes.

The news sent excited punters piling into every seat-of-your-pants oil stock involved in that area. They chased Rockhopper up to 342p before they closed 70.75p or 33pc higher at 288p on turnover of almost 19m shares.

Rockhopper announced a dry well in August and so another failure would have raised enormous questions about the viability of Sea Lion. But shareholders were ecstatic to hear that drilling of the 14/10-4 well appraising the discovery has been successful.

Chief executive Sam Moody said: 'Sea Lion is now highly likely to be commercially viable.'

It led Richard Rose, analyst at broker Evolution Securities, to advise clients to buy. He reckons a 240m barrels per day commercial discovery would be worth 680p a share. He has increased his net asset value per share forecast to 580p from 512p based on Sea Lion risked at 75% including net cash post this well result.

Desire Petroleum gushed to 50p before boiling over to close 3p better at 39.75p.

Buyers heard that the Ocean Guardian semi-submersible rig will now proceed to drill the Ninky prospect, in which Rockhopper has a 7.5% interest, after which Desire intends to drill a minimum of three further appraisal wells on the Sea Lion feature.

Throwing caution to the wind, speculators also swarmed all over Argos Resources, 1.75p better at 34.75p, Border & Southerns, 3p dearer at 63.125p and Falkland Oil & Gas 0.5p firmer at 79.5p.

Away from the Falklands, Encore Oil advanced 4.25p to 114.25p after announcing an oil and gas discovery in the UK central North Sea. The company said the Burgmanwell 28/9-4 successfully encountered good quality hydrocarbons.

Gulf Keystone jumped 12.75p more to 174.25p on further consideration of last week's oil strike at its exploration block in the Kurdistan region of Iraq.

The revitalised Footsie took Friday's rally a useful stage further. It rose 67.96 points more to 5,786.09 as fears over the Japanese nuclear crisis eased and investment guru Warren Buffett suggested Japanese equities now represent a good buying opportunity.

Wall Street helped London's cause by rising 196 points at the outset with sentiment across the pond boosted by news of AT&T's mega £24bn offer for Deutsche Telecom's T-Mobile and discount broker Charles Schwab's £615m all-share bid for OptionXpress.

The surprise US offer for T Mobile sparked hefty buying of mobile phone giant Vodafone, 6.05p up at 176.025p. Bulls say the deal reduces the number of players in the US market from four to three and there must now be a chance that Verizon Wireless may now look to buy out Vodafone's 45% stake in the company.

Credit Suisse pumped up the volume at Weir Group, 73p better at 1707.5p, by upgrading to outperform.

Rolls-Royce advanced 20p to 598.75p after Evolution upgraded to buy from hold.

Shares in scientific equipment specialist Judges Scientific surged 47.5p to 417.5p following news of the £3.26m earnings-enhancing acquisition of a (51%) controlling interest in Deben UK Limited.

Shore Capital says the cash purchase adds to Judge's existing business portfolio in the field of electron microscopy and related products which came to the group via the acquisition of Quorum in June 2009.

The broker has upgraded its current yield revenue forecast by 10% to £17.9m and by 12% to £19.3m for 2012 and profits by 16% and 19%respectively.

Tilbury Docks owner Forth Ports added 7p to 1614.5p ahead of today's results. Arcus European Infrastructure Fund increased its offer for the group on March 7 to 1650p a share.

As a result directors agreed to allow certain confirmatory due diligence. Dealers were hopeful that an agreed further increased offer could accompany the figures.

Speculation that merger talks with Unibet could be on again left Sportingbet 0.75p better at 49.875p. The two online operators talked briefly last November before walking away.

Espirito Santo says a merger would make sense as both derive revenues primarily from mainland Europe. Sportingbet has exposure to Australia which Unibet lacks and Unibet has no exposure to Turkey.

Medical devices company Lombard Medical edged up to 1.325p on hearing that its lead product, the Aorfix endovascular stent graft, is now the third most widely used aortic stent graft in the UK.