Understanding of connectivity in Senegal key to tapping upside for Cairn
by Elaine Reynolds
When Cairn Energy started its four well appraisal of its SNE discovery in late 2015, the key objectives of the programme were to:
- Establish the productivity of the reservoirs
- Determine the reservoir continuity and connectivity
- Reduce the resource range uncertainty
This week, the company provided details of the results of the appraisal campaign as part of its half yearly results. The successful programme boosted 2C resources by 43% from 330mmbbls pre campaign to 475mmbbls and established flowrates of between 5000bopd and 8000bopd across four separate DSTs in two wells.
Market Commentary - Housing, Infrastructure, Construction and Services
News this morning is from Polypipe, Mears and Balfour Beatty; the former two have half year numbers released this morning and the latter has announced a $697m contract to undertake the electrification of 52 miles of railway track between San Francisco and San Jose. The HICS sector moves yesterday were much tighter than some of the “Cat and Mouse” style games in the Olympic Cycling events. Capita was the biggest riser, up 1.1% and Atkins the largest loser down 1.5%, so from the top to the bottom there was little movement and no new news guide us. The facts are that the” Phoney War” on Brexit continues, sterling remains weak, oil is stuck at c $50 a barrel and UK investors, even without Brexit, are seeking “safe” yield to get some at least some return when bonds offer so little and interest rates are stuck at near 0%.
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Earnings forecasts: Reassuringly stable?
Recent trends in consensus earnings forecasts highlight analysts’ confidence in corporate performance for 2016, even as GDP forecasts continue to decline. For now, it appears that the global phenomenon of steadily declining earnings forecasts, a factor behind the relatively weak 2015 equity market performance, has ebbed. There also remains no observable impact on aggregate UK earnings forecasts from Brexit to date, although as we have previously noted for the UK, FX benefits for exporters have offset modest downgrades to sectors focused on the domestic economy.
Read more...The rise of the activists
A look at the impact of activist investors on the Aerospace and Defence sector
Last week it emerged that the activist investor, Elliott Capital Advisors, now holds a 5% stake in Meggitt. This makes Meggitt the third European Aerospace & Defence company to have such an investor on its shareholder register and it led me to ponder what is driving these activists? Why the interest in Aerospace and Defence? And what are they trying to achieve?
Read more...Market Commentary - Housing, Infrastructure, Construction and Services
Bovis Homes reported its half year numbers this morning which show an 18% rise in revenue and operating profit. It refers to demand since the Referendum as being resilient and states that sales rates and prices since 23 June have been similar to the first six months of the year. Other news of relevance today comes from G4S with the unexpected departure of CFO Himanshu Raja and from Toscafund's response to Speedy’s RNS of Friday last.Read more...
Market Commentary - Housing, Infrastructure, Construction and Services
The only item of relevant formal news this morning is the Speedy Hire board’s response to Tosca and calling notice for the EGM to be held on 9th September. Morgan Sindall was the best riser yesterday, up 3.6% to 701p as John Morgan proved his confidence in the business by buying 500,000 shares at 640p; £3.2m is a big chunk of change so naturally the market listened. The Builders merchants are still suffering a lack of support with Travis Perkins falling 2.2% yesterday and Grafton by 1.7%. Negative broker comments were unhelpful to the companies’ causes yesterday.
Read more...Geared Turbofan engine too hot to handle?
Teething problems for Pratt & Whitney's new narrowbody engine
Pratt & Whitney’s struggles to deliver correctly functioning Geared Turbofan engines for Airbus A320neo aircraft is a reminder that aircraft development is always fraught with risks. Airbus clearly signposted in January that 2016 neo deliveries would be back loaded into the second half of the year. It is targeting 56 aircraft this year but as of the end of July has only delivered 11, so it has its work cut out in Toulouse. Where has it gone wrong?
Read more...Market Commentary - Housing, Infrastructure, Construction and Services
There is little new news today. The Toscafund letter to the Speedy chairman and the responses, plus an update from Grainger, are the only pieces to guide us today. Yesterday two stocks rose by 16% or more: G4S was up 16.0% and Interserve 16.5%. Speedy was the dominant player in UK Hire, but six years ago lost its way as its markets declined in the recession and never really got back on to its game, especially as the hire sector changed as well. Investors have plenty of reasons to be dissatisfied over a long period so the reaction of Toscafund should be no surprise, in our view.
Read more...Gilt shortage: It takes two to tango
Yesterday’s failure by the Bank of England fully cover its bond purchase order indicates that the re-introduction of QE has created a significant squeeze in the UK’s bond market. This auction failure highlights a possible constraint on the BOE’s QE policy, at least until a more expansive fiscal policy delivers a significant increase in the future supply of gilts or substitute securities.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services
News from Interserve and G4S this morning. Both stocks performed well yesterday rising 2% and 3% to 320p and 196p respectively and the information released today may help sustain the position and perhaps trigger further progress.
The market was not as enthusiastic about SIG’s numbers as we expected. The stock fell 6.2% yesterday at COP to 100.5p having risen 5% at the open. The reduction in GM over the last few years from around 29% to the current near 27% is, we expect, at the heart of the issue.