PROACTIVE NEWS SUMMARY: BP, Stratex International, African Eagle Resources, IGas Energy, Marston's
BP (LON:BP.) made headlines this morning after a US court ruled that the British oil and gas supermajor was liable for losses suffered from oil leaking from the damaged Macondo well into the Gulf below the surface.
The news pushed BP’s share price down 2.5 percent in afternoon trade, making it the heaviest faller in the top flight.
The first main story published by proactive today took a closer look at the ruling and its implications for the group.
BP sued Swiss firm Transocean claiming it should bear the compensation costs as it was owner and operator of the Deepwater Horizon rig when it exploded, killing eleven rig workers and sending millions of barrel of oil into the Gulf of Mexico.
That ruling applies even if Transocean is found to have been grossly negligent because the contracts between the two companies indemnified the rig owner against compensation claims, the judge said.
Transocean may have to pay pollution fines levied under the Federal Clean Water Act and may be liable for a share of any punitive damages, but BP will pay for the claims for damages from businesses affected by the spill.
The ruling left both firms saying their positions had been vindicated, but it was Transocean shares that surged after the judgement, adding over 7% in pre-market trading.
Analysts said the decision pointed to a similar outcome in BP’s case against Halliburton, the company responsible for the cement casing at the failed Macondo well.
Halliburton has also gone to court to prove it is indemnified by its contract and a similar ruling could mean BP having to stump up all of the compensation and clean-up costs.
BP has spent US$14 billion so far in its spill response and clean-up operation and has set aside a further US$20 billion for damages claims.
The UK oil group has forecast the costs of sealing the blown out well, fines, the cleaning-up programme and compensation will total US$42bn.
Two other articles were dedicated to small cap mining stocks Stratex International (LON:STI) and African Eagle Resources (LON:AFE).
Starting with Stratex, broker Northland said drilling results due soon from the group’s Blackrock and Öksüt projects should give a boost to its value.
Results for holes 52-57 at the Öksüt project in Turkey are expected in the coming weeks along with an updated resource estimate, said Northland.
Assay results from the Blackrock project in Ethiopia are also expected during the first three months of 2012 and management believes these could define some good grades, according to Northland.
The house broker said that a call with management had given it confidence that the key exploration projects are on track to deliver encouraging results.
The development assets are also broadly on course to deliver near term cashflow towards the end of 2012 and early 2013, it added.
Öksüt currently has a resource of 222koz gold in an oxide zone and 76koz in a sulphide zone but recent exploration success suggests a likely extension to the resource, said the broker.
Centerra is Stratex’s partner in the project and has an option to increase its stake to 70% by spending a further $3 million on exploration over the next two years.
Elsewhere in Turkey, Stratex has respective joint ventures with Turkish companies NTF at Inlice and Bahar at Altintepe for gold.
Fellow mining firm African Eagle, which is focused on nickel, has appointed two new directors today, ending a busy week of activity as it moves its Dutwa project nearer to bankable status.
It had also hired two specialist companies for vital roles in the preparation of a bankable feasibility study (BFS) for the Tanzanian project, due at the end of this year.
The appointment of finance expert Don Newport and resource specialist Dr Christopher R. Pointon as non-executives was welcomed by Ocean Equities analyst Christopher Welch, who said it demonstrated the potential quality of the firm's flagship project.
"The attraction of such high calibre individuals to African Eagle supports our view that Dutwa is one of the best nickel projects in the current development pipeline," he said.
"There has been a marked change in the management team at African Eagle over the last six months, following the appointment of Trevor Moss as the new CEO," he said.
Welch said Newport will be able to assist in financing the construction of Dutwa, while Pointon's steel materials supply and nickel production experience will augment Trevor Moss and Aidan Schoonbee’s African mine project development expertise.
African Eagle has streamlined the BFS so it can be completed within 12 months, while Schoobee will now marshal the feasibility study’s consulting team.
World leading metallurgical and engineering consulting firms have been engaged. Lycopodium Minerals will be the engineer to complete the (BFS) for Dutwa, while SGS Metallurgy Laboratory will be responsible for the pilot test programme - an essential component of that BFS.
Another report took an in-depth look at IGas Energy (LON:IGAS), which revealed an unexpected result in the Ince Marshes exploration well, south west of Warrington, on Thursday.
It said the find was very significant, with a shale section of at least 1,000 feet found in the well.
At target depth the well was still in the shale section, it said.
Gas indications were observed across the interval and a number of potentially prospective zones were identified. According to IGas, this area is part of the Bowland shale.
The company told Proactive Investors that coal bed methane (CBM) remains the priority despite the fact that the shale discovery may have raised a few eyebrows.
Indeed, many investors may be quick to size up the potential of the shale discovery – because of the massive Bowland shale play discovered last year by Cuadrilla Resources further north, near Blackpool.
IGas’ shale potential is no secret. The firm has highlighted the prospectivity of its acreage on a number of occasions in the past.
But the group is keeping its sights fixed firmly on the development of a coal bed methane operation, for the near term at least.
“The well was targeting coal bed seams. It just so happened to encounter shales as well,” chief financial officer Stephen Bowler told Proactive Investors.
“There is no change in emphasis in terms of the group’s objectives or what we are drilling for.”
The emphasis of the Ince Marshes well was on the coalbed, not shale rocks. It was designed to find out the thickness of the coal seams and to pinpoint their locations, Bowler explained.
The company’s focus is on CBM, he added. And at the moment it is too early tell whether the shale element of Ince Marshes will be explored or developed further. Instead Bowler says IGas needs to assess the findings of the well first.
Mainly, the emphasis will be on the Doe Green field development and establishing CBM production volumes from there, Bowler added.
Away from resources stocks, Proactive covered today’s Christmas trading report from brewing firm Marston's (LON:MARS).
The group reported strong trading over Christmas and the New Year despite the challenging consumer environment.
Profitability is in line with the group’s expectations and it is making good progress in each of its trading divisions, it said, as it released a statement covering the 16 weeks to January 21.
In its managed pubs, like-for-like sales were 5 per cent up on last year, with like-for-like sales of food up 5.5 per cent. Drinks sales, like-for-like, grew 4,8 per cent, said the firm.
Operating margins are in line with last year and Marston's plan to build 25 pub-restaurants in the current financial year remained on track, said the company, which operates over 2,000 pubs in England and Wales.
In the leased, tenanted and franchised pubs, profits for the period are estimated to be around 3 per cent above last year.
Meanwhile, in Marston's beer company, the brands outperformed the market with own-brewed beer volumes 2 per cent above last year, said the firm.
The company said: "We are expecting the challenging consumer environment experienced in 2011 to remain in 2012."
