Tullow Oil slid nearly 5% after it said lower crude prices would hit its revenues.
First half sales are expected to fall by almost a quarter to £290m due to falling volumes and commodity prices, the company said in a trading update. But it said its Jubilee well in Ghana was on track to produce its first oil in the second half of 2010, and its Tweneboa-1 well had made a significant discovery. The company's shares have fallen 43.5p to 847p, but house broker Royal Bank of Scotland is retaining its buy recommendation with a £10.50 target. Analyst Phil Corbett said:
"While we anticipate some minor changes to forecasts (shaving production for 2009), we see nothing in the statement to alter the fundamentals of a solid investment case. Jubilee remains on track for first oil in the second half of 2010 and a number of potentially significant exploration wells in the second half of 2009 are likely to keep the company in focus against a backdrop of growing industry interest in Ghana's potential."
Overall, the market has slipped back again despite a rally in the miners. Ahead of the start of the Ashes - which may prove a distraction - and the government's long awaited banking plans, the FTSE 100 has edged down 16.63 points to 4170.37. Chris Hossain, senior sales manager at ODL Securities said:
"Last night's pull back on the Dow highlights the fragility of any sustained upside momentum. As much as we want to will those markets higher, until we see a raft of positive economic data over a lengthy period of time, we may well continue to see markets trade the range."
Rio Tinto has risen 25p to £19.45 and BHP Billiton 7.5p to 1307.5p after a positive recommendation from Investec. The broker said in a note this morning:
"The mining sector is undergoing a correction, which we expect to continue in the near term. However, recent share price weakness is providing some buying opportunities and we have upgraded our recommendations on BHP Billiton and Rio Tinto to buy. Despite these pockets of value, we are hesitant to call the bottom for some companies, including the platinum producers and Anglo American, which are heavily leveraged to a very strong rand."
Anglo is currently 21p lower at 1606.5p. There is also talk that China may have signed a much-anticipated iron ore deal with the miners, but for six months rather than a year.
Elsewhere, publisher Reed Elsevier has moved 0.25p higher to 465.5p following yesterday's disposal of parts of its business division. Deutsche Bank has cut its price target on the company from 700p to 650p but retained its buy rating. It said:
"The new chief executive, Ian Smith, will give his first major update to the market at the half year. We believe that nervousness of this is a material drag on the share price at present. We expect an incremental focus on costs savings/reinvestment and R&D. Reed Elsevier is a pretty well invested company, with decent performance against peers in most operations and a well advanced migration from print to digital. Overall we think the interims won't be a "big-bang" event."
Lower down the market Phorm has dropped another 32.5p to 210p after confirming Carphone Warehouse has terminated its deal.
