Oil and Gas Eye Q4 2013

Main Market oil and gas movers

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Afren’s share price performed best among FTSE 350 oil and gas companies, rising 24% over Q4. In November, it announced that the estimated gross recoverable resources range at its Ogo prospect on the OPL 310 licence offshore Nigeria were significantly ahead of pre-drill expectations.

BP also had exploration success in Q4, with a significant oil discovery in the deepwater US Gulf of Mexico. Its share price rose 13% over the quarter.

In December, BG Group announced an increase in total recoverable resources for the Mzia discovery and across Blocks 1, 3 and 4 offshore Tanzania, ending a successful drilling and testing campaign. It also announced first gas production from the Jasmine field in the UK North Sea in November. Its share price rose 10% over Q4.

In October, EnQuest said it had agreed to buy the UKCS Greater Kittiwake area assets from Centrica, potentially creating a new development and production hub. Its share price ended Q4 up 5%.

The same month, Cairn Energy said it had farmed-in for a 20% non-operated interest in an exploration block offshore Morocco, scheduled for drilling in the second half of 2014. Its share price rose 3% in Q4.

Ophir Energy was one of those whose share price fell over Q4. In November, it said it had entered into an agreement to sell a 20% interest in Tanzanian Blocks 1, 3 and 4 to Pavilion Energy. The following month, it also said it had entered into a farm-out agreement with OMV covering its deepwater offshore blocks in Gabon. Ophir’s share price ended Q4 down 1%.

Premier Oil was also active in the deal market in Q4. In early October, it said it had signed a Heads of Agreement with Falkland Oil and Gas to farm-in to licences PL004a and PL004c in the North Falkland Basin, adjacent to the Sea Lion development. The same month, it said it had signed a farm-in agreement for a 55% licence interest in Block 2B, onshore Kenya. Later in the quarter it announced it had withdrawn from Block L10A, offshore Kenya. Its share price fell 4% over Q4.

Tullow Oil’s share price fell 17%. In October, as a precautionary measure, it temporarily suspended all operations in two blocks in Northern Kenya following demonstrations by local people over employment concerns. In December, it said the Tultule-1 wildcat well in the South Omo block onshore Ethiopia would be plugged and abandoned as a dry hole.

During October, Essar Energy announced its intention to exit from its 50% owned joint venture business, Kenya Petroleum Refineries, which operates an oil refinery in Mombasa, Kenya. The following month it reported an after tax loss of US$391.6 million for the six months ended 30 September 2013, and its share price finished Q4 down 44%. In December, it issued a statement noting its share price performance and reiterating its positive outlook.

Share price movements of FTSE 350 Oil and Gas Producers over Q4 2013

EY - Share price movements of FTSE 350 Oil and Gas Producers over Q4 2013

Source: Thomson Reuters Datastream