Tullow and oil services group Petrofac were among the day's risers.
It was the oil and gas business that drew the market’s attention on Wednesday, with traders prospecting for profits among the sector’s exploration and services companies.
On the main board, Tullow Oil (LSE: TLW.L - news) , which reported full-year results, was the day’s biggest riser with a gain of 80p to £12.60. The shares were buoyed by test results from Tullow’s Twiga South-1 well, which the company said “provide the first potentially commercial flow rates achieved in Kenya”.
The Twiga numbers were the “major news” in Tullow’s full-year results, according to analysts at Canaccord Genuity. Indeed, investors have been holding out for more encouraging developments from Africa-focused Tullow after the explorer disappointed with three wells towards the end of 2012.
Today, the group took a $671m (£432m) writedown for unsuccessful drilling efforts, but met market expectations with a 4pc rise in 2012 pre-tax profits to $1.1bn.
Blue-chip oil services group Petrofac was also in buyers’ sights, with an upgrade to “buy” from “neutral” at UBS (Xetra: UB0BL6 - news) spurring interest in the shares. Petrofac, along with its peers, was hit by a huge profit warning from Italian rival Saipem (Other OTC: SAPMY - news) at the end of January. Analysts at the broker today told investors not to be hasty when making the read-across between the London-listed group and its European competitor.
“While Saipem’s warning may have cast doubt on the business model [in the onshore engineering and construction end market], we think that Petrofac’s portfolio of projects is profitable and the order intake momentum is strong,” the UBS scribblers said. As well as boosting their recommendation on the stock, they raised their target price to £18.75 from £15.75, and the encouraging assessment in turn lifted Petrofac shares 33p to £16.55.
Another share on traders’ radar was small-capper Nostra Terra Oil & Gas after the group said the fourth well in the Chisholm Trail Prospect in Oklahoma had surpassed management’s expectations “by a substantial margin”.
Nostra Terra has a 5.31pc working interest in the well, which produced an average of 505 barrels of oil equivalent per day (boepd) over the most recent 10 days of output, well above the company’s hopes of 200 boepd. Dealers were similarly impressed, and pushed shares in Norra Terra up as much as 14.4pc in heavy volume before closing 0.015 higher at 0.57, an increase of 2.7pc.
Renewed speculation that engineer Weir Group (Other OTC: WEIGF - news) , which makes pumps for the oil, gas and mining sectors, could receive a bid from General Electric (Other OTC: GEAPP - news) helped shares in the company rise 51p to £21.76. Earlier this week GE sold its holding in media business NBC Universal for $16.7bn, giving the US company greater firepower for acquisitions, and Weir was mooted as possible target for GE last year after the American group launched a new mining equipment division.
The FTSE 100 , of which Weir is a member, also gained ground, despite a number of heavyweight shares, including AstraZeneca (NYSE: AZN - news) and Royal Dutch Shell (Xetra: A0ET6Q - news) , trading without the right to their latest dividend. The weak pound helped the benchmark index, with many blue-chip companies obtaining their earnings abroad, and London’s main board closed 20.73 points better at 6,359.11 a fresh closing high for 2013. The index hit its best level since January 2008 during the course of the day’s trading.
Even so, Vodafone (LSE: VOD.L - news) was a weight on the FTSE 100 (FTSE: ^FTSE - news) , with reports that the mobile telecoms giant could splash out on a takeover of Germany’s Kabel Deutschland dragging the shares 1.85 lower to 171.65p.
On the FTSE 250 (FTSE: ^FTMC - news) - up 126.98 at 13,602.99 - African Barrick Gold (LSE: ABG.L - news) was under heavy selling pressure after reporting a 70pc drop in pre-tax profits in 2012. ABG shares fell sharply last month on news China National Gold ended talks over acquiring a majority stake. Today, they plunged a further 39 to 302p, a drop of 11.4pc, with the group’s production guidance for this year also disappointing the market.
Both AG Barr and Britvic (Other OTC: BTVCF - news) suffered late in the session after the Office of Fair Trading decided to refer their merger to the Competition Commission, putting the entire deal in question. Britvic shed 40 to 420p and AG Barr lost 39½ to 515½p.
Data centre group Telecity bounced 68½ to 893½p on the release of its full-year results. The shares fell in the run-up to the earnings announcement, with Liberum Capital on Monday advising investors to go short, but gained ground today after the company posted a 28pc increase in pre-tax profits.
Troubled coal group Bumi topped the mid-cap index with a jump of 40.8 10.1pc to 444.8p. Investors were buoyed by Tuesday’s agreement for the Bakrie family to put down a $50m deposit on their proposal to end their relationship with the FTSE 250 company. Bumi shareholders have been embroiled in a battle for control of the group, with a vote on Bumi’s future due to be held next week.
Among the smaller companies, traders sent potash group Sirius Minerals (Other OTC: SRUXY - news) tumbling 3¾ to 25p. Dealers were flustered by the departure of director Alan Watling, as well as a six-month delay in the completion of a so-called definitive feasibility study for its key project in York.
“With Watling’s strong experience leading large-scale greenfield projects through to production within record timescales, we expect his departure to be taken negatively by investors,” analysts at Jefferies said, warning Sirius may also have to raise capital in the market this year.