The companies will work together on a key project in Cameroon.
Oil and gas explorer Bowleven (LSE: BLVN.L - news) has been buoyed by intermittent bid speculation ever since Dragon Oil (Xetra: 877789 - news) abandoned an approach in February, but today traders were buying on the back of much firmer deal news.
Shares in the AIM-listed company, which has operations in Cameroon and Kenya, surged as much as 22pc after the exploration company agreed a strategic alliance with FTSE 100 (FTSE Index: EO100.FGI - news) energy services giant Petrofac (Berlin: P2F.BE - news) . Bowleven eventually closed up 5¾ - or 7.7pc - at 80½p, although the shares remain well below the 136p reached in February, when Turkmenistan-focused Dragon Oil was interested in a potential offer.
The Petrofac deal is a boost for Bowleven, as the blue-chip company has agreed to invest up to $500m (£313m) to help develop the smaller group’s acreage off Cameroon, with the aim of starting gas production in 2016. In return, Petrofac will receive a share of the cash flows from the development, the so-called Etinde Permit. Analysts welcomed the alliance, with broker N+1 Singer concluding that it “should help alleviate funding concerns and validate [the] Etinde project in the eyes of investors.”
However, Bowleven was not the only AIM-listed exploration company on punters’ radar today. Europa Oil & Gas (Berlin: EGN.BE - news) surged 1.125 - or 13.6pc - to 9.375p after the company announced there could be as much as 1.1bn barrels of oil at its Mullen prospect off the west coast of Ireland (Xetra: A0Q8L3 - news) .
In the wider market, there were still nerves ahead of the US presidential election result as Americans finally went to the polls. However, corporate news helped London’s blue-chip index move higher. The FTSE 100 added 45.84 points to 5,884.90 and the mid-cap FTSE 250 (FTSE: ^FTMC - news) gained 51.09 to 12,081.55.
Marks & Spencer (Dusseldorf: MA6.DU - news) rose after reporting half-year results, which showed a smaller fall in profits than analysts had expected. The shares advanced 10.8 to 398.7p. Security group G4S (Other OTC: GFSZF.PK - news) reported nine-month revenue growth of 6.3pc, excluding the company’s troubled Olympics contract, helping the shares close up 9.2 at 270p.
Cambridge (BSE: CTE.BO - news) -based chip designer ARM Holdings (LSE: ARM.L - news) put in a strong showing, with dealers saying the group was lifted by reports that Apple (NasdaqGS: AAPL - news) could start using ARM designed chips instead of Intel (NasdaqGS: INTC - news) processors in its Mac computers.
The FTSE 100 company was also boosted by the announcement it was leading a consortium that is spending $350m on rights to 580 patents from MIPS Technologies. ARM will contribute $167.5m as part of the deal. The shares rose as much as 40½p before closing up 14½ at 709½p. FTSE 250-listed Imagination Technologies , 9.3 higher at 474.3p, is snapping up MIPS’s operating business for $60m.
Bank of America Merrill Lynch caused a stir after upgrading Clive Cowdery’s insurance buy-out group Resolution to “buy” from “neutral”. The broker argued that Resolution looked attractive with a prospective dividend yield of 9.5pc, double the average of its peers. The company, which boosted its pay-out in August and said it would stop acquisitions, rose 15.4 - or 7pc - to 236.6p, the blue-chip index’s best performer.
Elsewhere, Standard Life (Other OTC: SLFPF.PK - news) advanced 5.4 to 303.4p and Aviva (LSE: AV.L - news) gained 6 to 339.6p. An increase of 3.9 to 144.2p saw Legal & General (LSE: LGEN.L - news) shares hit their highest level in more than five years, a move that was accompanied by takeover speculation in the market.
Meanwhile, profit-taking sent engineering services group Babcock International to the bottom of the FTSE 100. The company, which maintains submarines for the Royal Navy, reported a 13pc increase in first-half underlying profits and an order book of £12.5bn. Analysts said the shares had been on a strong run ahead of the release of its half-year numbers, having risen every day last week, and Investec (EUREX: INVF.EX - news) downgraded its recommendation on the company to “hold” from “buy”, predominantly on valuation grounds.
Still, the broker was clearly a fan of the stock, arguing that Babcock has “one of the sector’s strongest order books” as well as “an excellent pipeline of new business opportunities”.
Nevertheless, the shares ended the day down 34½ at 954½p.
Emerging-markets focused lender Standard Chartered (Other OTC: SCBFF.PK - news) was also among the fallers, hurt by a downgrade from Credit Suisse (NYSEArca: CSMA - news) . The broker forecast lower growth in Asia and longer-term revenue growth at the 5pc to 6pc level, below Standard Chartered’s targets. Credit Suisse cut its rating to “underperform” from “neutral” and the FTSE 100 lender shed 14½p to £14.68½ as a result.
On the FTSE 250, technology group Invensys (EUREX: ISYF.EX - news) was bolstered by talk of a dividend increase. Nomura argued that the group’s controls business is seeing a recovery and should therefore improve Invensys’s cash flow. Estimating that about a fifth of its market value will be in cash by 2014, the broker speculated that the company could lift its pay-out ratio to about 40pc of earnings-per-share. Recommending investors “buy” the shares, Nomura helped Invensys gain 4½ to 238.9p.
TalkTalk Telecom was lifted by an upgrade to “buy” at heavyweight broker Goldman Sachs (NYSE: GS - news) . The bank raised its assessment of the group on the back of growth prospects in the UK triple-play market, arguing they “expect earnings momentum and rising shareholder returns to drive a significant re-rating”. Shares in the FTSE 250 group, which releases first-half results next Tuesday, advanced 2.2 to 192.3p.
Finally, a jump of 6¼ to 63¾p forced artificial hip developer Corin to confirm after the close that it was in talks which could result in 2IL Orthopaedics making a in 70p-a-share offer for the group.