Market report: EnQuest in £82m cash call as North Sea oil sale flops

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Struggling North Sea oil firm EnQuest today asked shareholders for an £82 million lifeline in its bid to stay afloat under the weight of huge debts.

Shares in the company, one of the largest producers in the UK’s North Sea, fell 0.92p, or 3.3%, to 26.83p as it confirmed plans to tap shareholders in a placing and open offer at 23p per share.

Chief executive Amjad Bseisu pledged to back the offer to the tune of £28 million.

The discounted share sale, run as an accelerated bookbuild by JPMorgan and Bank of America Merrill Lynch, was unveiled alongside changes to its revolving credit facility which EnQuest said it had agreed with “key stakeholders”.

They include Aberdeen Asset Management and Schroders.

It comes after the company failed to sell part of its stake in the Kraken oil field, which is expected to start producing next year.

The FTSE 100 slipped back below 7000, off 39.52 points to 6984.49, and the pound was back below $1.22.

Miners were the main culprits for the Footsie’s slide after weak trade data from China, reigniting concerns about its appetite for industrial metals.

Anglo-Aussie iron ore giants BHP Billiton and Rio Tinto bore the brunt of the sell-off. BHP dropped 55.01p, or 4.4%, to 1183.49p and Rio lost 115.5p, or 4.3%, to 2592p.

Standard Life, down 16.7p at 332.2p, followed miners lower after Barclays cut its rating on the investment giant to underweight.

Analyst Alan Devlin said the performance of Global Absolute Return Strategies, its flagship fund, has been poor over the past 18 months.

“We have seen a similar experience at flagship funds at both Hendersons and M&G (owned by the Pru), where earnings estimates have declined 10% and 20% respectively,” Devlin added.

Marks & Spencer was 2p cheaper at 326.1p after Liberum threw the retailer onto its conviction Sell list. 

The broker warned that online clothing sales would not make up for falling store sales of clothing over the next few years.

Silver miner Hochschild Mining shone on the mid-cap index, up 7.4p to 259.4p, after record third-quarter production prompted it to raise full-year output forecasts for the second time. 

Booker Group, owner of Budgens and Londis stores, improved 2.5p to 178.1p, inspired by solid interim results that revealed sales grew 13% to £2.5 billion, with pre-tax profits up 9% to £81 million. 

Online trading firm Plus500 added 10.5p at 643p after JPMorgan and Morgan Stanley increased their stakes to above 5%.

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October 13, 2016 |
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