Oil and Gas Eye Q1 2014

Main Market oil and gas movers

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Royal Dutch Shell and Soco International were the only two FTSE 350 oil and gas companies to register a share price gain in Q1, with modest increases of 3% and 0.2%.

Cairn Energy’s share price ended Q1 down 38%. Pending the resolution of a tax dispute, it has been restricted by the Indian Income Tax Department from selling its remaining shares in Cairn India, which were valued at $1.0 billion as at 31 December 2013.

Ophir Energy’s share price fell 27% over Q1 following disappointing drilling results. In January, it said that the Mlinzi Mbali-1 well, the first in Block 7 offshore Tanzania, was found to be water bearing. Mlinzi Mbali-1 was the first of a series of high impact, high risk wells that will be drilled by Ophir through 2014. In March, it said the Padouck Deep-1 well in the Ntsina Block offshore Gabon had encountered no significant hydrocarbon shows in the targeted reservoirs.

Tullow Oil also suffered a drilling disappointment this quarter. In February, it reported that volumes proven in the 7222/11-2 well on the Langlitinden prospect in Norway were insufficient to justify a field development. Its share price fell 12%.

In January, BG Group issued Force Majeure notices under its LNG agreements in Egypt reflecting the ongoing diversions of gas volumes to the domestic market. The following month it announced final results for 2013, which showed total operating profit had decreased 5% to $7.6 billion. Its share price dropped 14% over Q1.

In February, Essar Energy said it had received a possible offer from its 78.02% shareholder, Essar Global Fund Limited (EGFL), for the ordinary shares it does not currently own. In March, EGFL announced a firm intention to buy the outstanding shares. In response, Essar released a statement saying its Independent Committee Board considers that the 70 pence per ordinary share offer materially undervalues the company and its future prospects. Essar’s share price fell 6% over Q1.

Share price movements of FTSE 350 Oil and Gas Producers over Q1 2014

EY - Share price movements of FTSE 350 Oil and Gas Producers over Q1 2014

Source: Thomson Reuters Datastream