Edison Investment Research

No moveable hydrocarbons in Alaskan Winx-1 well

Initial wireline data points to low quantities of non-mobile oil in both the Nanushuk and Torok formations in Winx-1. The well, drilled by a consortium of independent companies (88 Energy, Red Emperor Resources, Otto Energy and Pantheon Resources )
was targeting the Nanushuk play fairway of Alaska’s North Slope and was looking to build on Repsol’s 2017 success at Horseshoe-1. The Repsol well is located four miles to the west of Winx-1 and had extended the Nanushuk play 20 miles to the south of the Pikka Unit.
Preliminary interpretation indicates that oil saturation and fluid mobility in the Nanushuk was negatively impacted by the presence of dispersed clay in the matrix. While this is a known characteristic elsewhere in the Nanushuk, Winx-1 did not benefit from the presence of further high quality oil saturated sandstones as typically seen in successful wells in the play.

Morrisons (MRW);stands out as the vanilla option among supermarkets

Morrisons stands out as the vanilla option among supermarkets. It is free of the M&A hangover overshadowing Sainsbury and Asda, and is liked by its customers, with satisfaction up 20% in the last four years according to Which?. The company also shows steady evolution in its business model, with £700m of annualised wholesale supply sales achieved, ahead of target and on its way to £1bn. With a further £12m profit from non-retail activities including wholesale, services, interest and online, it takes the total to £54m, on track for its £75m-£125m target.

LSC Lithium Corporation (LSC); gets taken over by Pluspetrol Resources Corporation

LSC Lithium holds interests in a large portfolio of lithium brine bearing salars

Pluspetrol Resources Corporation’s C$111m cash takeover of LSC Lithium Corporation has been approved at a Special Meeting of the company’s shareholders. Pluspetrol will acquire 100% of all issued and outstanding shares in LSC Lithium for C$0.6612 per LSC Lithium share, a 5% premium to the share price the day before the transaction was announced and a 30% premium to the 30-day VWAP. All regulatory approvals are expected to be in place by 15 March 2019.

Marshall Motor (MMH); EPS up 46% from 12.3p to 17.9p for FY 2018

Dividend increased 33.4% to 8.54p per share

UK new car registrations may be stabilising, but conditions for 2019 remain challenging, compounded by Brexit uncertainty, even as H218 supply side disruption wanes, which may affect used car profitability. Despite the challenging new and used car markets, Marshall motors reports like-for-like revenue grew 1.2% in its unaudited FY18 results. With strong gross profit margin of 11.7%, underlying PBT rose 1.2% to £25.7m. However, the results show like-for-like new vehicle sales declined 8.2% due to impact of WLTP and diesel challenges.

Smith & Nephew (SN.); establishes its multi-asset digital surgery and robotic ecosystem

The company has also agreed to buy the Brainlab Orthopaedic Joint Reconstruction business

Smith & Nephew announced product launches and investments that it hopes will establish the company’s multi-asset digital surgery and robotic IO 7.0. The next version of the company’s handheld robotic surgical system is being designed to improve surgeon experience through a new interface, expanded surgical preferences and streamlined workflow, which may reduce surgery time compared with the previous version.

Lookers (LOOK); FY results: turnover rises 4% to £4,880m, PBT down 9% to £53.1m

Total new car and used car turnover showed declined 1% and increased 14% respectively

The year began well for Lookers, with the order book for new car delivery in March building in line with expectations. Used car volumes are growing and there’s further opportunities in aftersales. In its results for the year ended December 2018, Lookers reported an adjusted profit before tax of £67.3m vs. £68.4m in 2017. Earnings per share were down 8% to 11.07p from 12.06p. The final dividend per share increased 5% to 2.60p.

StatPro Group (SOG): announces adjusted EPS increases 26% to 7.3p

The company expects better margins this year

Stat Pro Group (SOG) announced its unaudited FY18 results today. For the year ended 31 December 2018 SOG reported an 11% year-on-year increase in revenue (13% in constant currency terms). StatPro Revolution, SOG’s flagship service, reported a 17% year-on-year increase in its organic annualised recurring revenue (ARR). The company’s adjusted EBITDA margins increased to 16.4% (vs. 2017: 13.9%).

Hydrocarbon discovery for Murphy at Cholula-1 offshore Mexico

While Cairn targets over 500mmboe in upcoming exploration programme

US independent Murphy Oil has encountered oil and gas in its Cholula-1 well in the Salina del Istmo Basin offshore Mexico, though further drilling will be required to confirm commerciality. Murphy was targeting gross mean resources of 220mmboe in the Upper and Lower Miocene and partner Ophir Energy has indicated that the results were broadly in line with pre-drill expectations. The Salina del Istmo Basin is a sub-basin of the Sureste Basin, and sits in deeper waters outboard of the shallower waters of the Zama discovery and Cairn Energy’s three exploration wells planned in 2019. Cholula-1 sits in Block 5, which was the most contested block in Round 1.4 and awarded in December 2016. The well was drilled to 4000m in a water depth of 750m, and was expected to cost just under $47m. Despite the promising results, Ophir has also announced that it is in advanced discussions to sell its 23.33% share of Block 5 for a modest profit.

French Connection (FCCN); making encouraging steps towards rejuvenating the brand

The strong performance of wholesale in key regions led to an 25.6% increase in divisional profit

The embattled retailer French Connection is making some encouraging steps towards rejuvenating the brand and returning the business to profitability. Retail like-for-like sales for the full year to 31st January fell 6.8%, consistent with the first half decline of 7%, whilst total retail sales declined by 10.6% to £58.4m, reflecting the ongoing store closure programme. Over the past 5 years more than half of portfolio has been exited and as a consequence the company now operated 96 owned stores and a further 195 licensed/franchised/JV stores. Further closures are expected in the current year. 

Oxford Biomedica (OXB); R&D collaboration with Microsoft Research

Oxford will leverage Microsoft’s cloud computing and machine learning capabilities to develop in silico models

Oxford has entered into an R&D collaboration with Microsoft to improve the yield and quality of next-generation gene therapy vectors using the cloud and machine learning. The partnership involves developing next-generation manufacturing technologies with the expertise of Oxford Biomedica researchers. It is initially for a two-year period and may be extended by either party. Oxford will use Microsoft Azure intelligent cloud platform for the analysis of large data sets.