Newspaper article The Evening Standard (London, England)

Explorers on Wrong Track as Bosses Dump the Shares; Market Report

Newspaper article The Evening Standard (London, England)

Explorers on Wrong Track as Bosses Dump the Shares; Market Report

Article excerpt


SPIRALLING oil prices have encouraged investors to chuck money at even the tiniest oil and gas explorers in the past 12 months, with amateur share clubs poring over seismic drilling reports and geological surveys to try to pick out the next Footsie newcomer.

But a growing number of oil and gas company directors have been selling shares, suggesting the ascent is likely to peak soon. Dana Petroleum directors Thomas Cross and Andrew Bostock sold more than [pounds sterling]6.5 million of shares in the company at the end of June and the beginning of last month while five Dragon Oil directors have dumped a total of [pounds sterling]3.3 million of shares in the past few weeks.

Dragon's shares have more than doubled to 161p in eight months while Dana's have put in a similar performance to reach almost 900p.

Andy Yates, director of online share research group Digital Look, says sell-offs by oil-company directors should be seen as a warning. He reckons they have sold a net [pounds sterling]9 million of shares in their own companies in the past three months even though the sector has risen by 16%. In the past 12 months, oil and gas company directors have sold [pounds sterling]56 million of shares, five times more than they have bought.

Despite all this, a handful of brokers has come out with upbeat predictions for oil explorer Getty. JPMorganupped its rating to overweight from neutral and lifted its target by 90p to 860p, citing better rewards ahead for shareholders. Analysts expect pre-tax profits to be between [pounds sterling]1.95 billion and [pounds sterling]2 billion with the consensus at [pounds sterling]1.98 billion, down on last year's [pounds sterling]2.07 billion.

Cazenove has repeated its outperform recommendation on Diageo, noting that gloomy guidance issued last month has dampened expectations and wondering if the drinks giant might choose to "lend weight to the notion that the commercial and financial performance is set to accelerate and improve". …

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