Market Report: Genel Energy woes pile up for Tony Hayward on $1 billion writedown

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Things are going from bad to worse for Tony Hayward and Nat Rothschild, the founders of Genel Energy.

A month after warning revenues would be lower than expected, the Kurdistan oil firm has taken a $1 billion (£721.2 million) writedown on the value of the Taq Taq oilfield, its main asset in the semi-autonomous region of Iraq.

The huge impairment charge followed an updated independent review of its proven and probable reserves, which have fallen from 683 million barrels of oil in 2011 to 356 million barrels at the end of 2015.

It is another blow for the company, which has been hit by delayed payments for oil exports as the local government struggles to finance its war with Isis. 

The shares tanked 32.52p, or 26%, to 92.23p — a hefty blow for financier and co-founder Nat Rothschild who owns 8% of the company. The question now is whether he and chairman Hayward will accelerate the search for a buyer to end their misery.


Shareholder: Nat Rothschild (Picture: Jeremy Selwyn)

London stocks were set to finish the month in the red despite the recovery over the last fortnight, with the FTSE 100 down  50.65 points at 6045.36.

Glencore’s rally continued ahead of tomorrow’s annual results, which are expected to show it swung to a $400 million loss in 2015 from a $2.3 billion profit the year before as the metals price slump continues to put pressure on the commodities trader-cum-miner. The shares were 3.95p firmer at 132.2p.

Shares in Hikma Pharmaceuticals were off colour, down 31p at 1874p as JPMorgan cut its target price after the terms of the drugmaker’s $2 billion Roxane takeover were revised to include lower revenues from the US-based generics business of Germany’s Boehringer Ingelheim.

HSBC was down 13.35p to 454p and Standard Chartered 17p cheaper at 413p, after Bernstein downgraded the former to underperform and slashed its target price on the latter from 1000p to 600p.

Distribution group Bunzl drifted 3p lower to 1932p as adjusted operating profits outside of the US and Europe tumbled 24% to £42.1 million.

It was only a matter of time before the commodities crisis forced junior miners to turn to deal-making. AIM-listed Amara Mining was 1.85p better off at 12.1p as it agreed to an all-share takeover by Australia’s Perseus Mining, another West African gold explorer, valuing Amara at £68 million.

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March 1, 2016 |
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