Things are getting desperate at Afren.
The Middle Eastern and African oil and gas producer has more than halved in value after the company warned that the recent collapse in oil prices has left it in desperate need of cash.
Afren, whose troubles started last year when management were caught up in a payments scandal, needs an injection of cash greater than its present value to keep up with debt payments.
The company is pursuing a restructuring and is in urgent talks to gain fresh funds.
Analysts at SP Angel Oil and Gas called the update “shocking”, adding: “Though we accept that the magnitude of the downward spike in the oil price has been dramatic, we must also try to understand why the risks in the business were allowed to build to such a level. There is little doubt that a fire sale may now ensue.”
Afren said it is still in talks with Nigeria’s Seplat over a potential takeover, but investors are holding out little hope, with Afren tumbling 9.7p to 7.94p.
One trader who follows the company called the activity “carnage”.
The wheels finally fell off the Footsie’s Bull Run today as the index slipped 21.74 points to 6830.66.
Dixons Carphone was the biggest straggler, down 21.6p to 408.1p after a downgrade from Morgan Stanley.
The bank feels shares in the electricals retailer are now too expensive after a 20% surge in recent months.
Royal Mail slipped 13.6p to 437.7p after a RBC Capital downgrade. Rumours are circulating that the Netherland’s PostNL could be plotting a bid for the postie.
EasyJet topped the blue-chip index, up 39p at 1796p, thanks a record quarter for passenger numbers: the number of passengers who flew with the budget airline in the first quarter was up 4.1% on the same period a year earlier.
British Airways-owner IAG rose 10.5p to 559.25p in sympathy.
Shower gel-to-washing up liquid group PZ Cussons, whose St Tropez self-tan brand is advertised by Kate Moss, climbed 10p to 321.5p as it announced a 10.4% rise in half-year revenues and a 7.9% increase in pre-tax profits.
Investec said the update held “no surprises” but warned the outcome of the upcoming Nigerian election could bring significant disruption to sales.
IGas, the UK’s largest shale gas operator, cheered Parliament’s decision last night to reject a temporary ban on fracking.
Chief executive Andrew Austin said the industry now had “clarity and certainty”. But IGas inched only 0.5p higher to 20p, haven fallen over 25% ahead of the vote.
