Thursday's most followed: Barclays, RBS, Lloyds, Costain, Rolls-Royce, Lochard Energy, Amerisur Resources, CoracReported by Proactive Investors on Thursday, 28 June 2012 (on June 28, 2012)
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The interest rate scandal remained at the centre of attention today after Prime Minister David Cameron said *Barclays (LON:BARC)*, which just got slapped with fines totalling £290 million, had serious questions to answer, while Labour leader Ed Miliband called for a criminal inquiry.
Shares in Barclays tumbled 12 percent to 171.95 pence this morning, making it the heaviest faller in the blue chip FTSE 100 index along with sector peer *Royal Bank of Scotland (LON:RBS)*, which tumbled 11 percent to 206 pence per share.
Barclays was found guilty of manipulating its submissions to the London interbank offered rate (LIBOR) and the Euro interbank offered rate (EURIBOR) to benefit its trading position, as well as attempting to influence other banks’ EURIBOR submissions.
Acting director of enforcement and financial crime of the Financial Services Authority (FSA) Tracey McDermott said the manipulation was serious, widespread, and took place over a number of year.
Cenkos Securities said it expected the costs of lawsuits related to Libor manipulation to dwarf the fines imposed on Barclays.
Furthermore, Cenkos said other banks including RBS, HSBC and Lloyds could also be hit with significant fines and damages that could reach billions since they have also been named in lawsuits.
The broker repeated its ‘sell’ recommendations on Barclays and RBS, while downgrading Lloyds to ‘sell’ from ‘hols’ and placing HSBC’s ‘hold’ rating under review.
Meanwhile, today’s joint venture announcements from *Costain Group (LON:COST)* and *Rolls-Royce (LON:RR.)* showed up among the most read RNS statements along with operational updates from small cap oil and gas firms *Lochard Energy (LON:LHR)* and *Amerisur (LON:AMER)*.
Rolls-Royce has formed a joint venture with LG by selling a 51 percent stake in Rolls-Royce Fuel Cell Systems (US) to the South Korean conglomerate for US$45 million, while Costain has formed a JV with water group *Severn Trent (LON:SVT)*.
The Severn Trent Costain JV will provide complete business water and wastewater management services to commercial and industrial water users.
The two companies will combine parts of their existing operations within the JV, in which Costain will initially hold 40 percent.
“Severn Trent Costain will help customers to manage their water and waste water usage in the most efficient, compliant and cost-effective way,” said chief executive of Costain Andrew Wyllie.
“Increasingly, customers are looking for a single expert provider who can help plan and manage their industrial water and waste water use across the full cycle.”
Additionally, Costain reported that it remains on track to hit its full year targets following a strong performance in the first half. In the first six months of 2012, the group secured £850 million of revenues for the full year.
Moving to oil and gas, Amerisur has redesigned its offtake programme in the Platanillo field in Colombia, while Lochard told investors that it has settled a number of issues, which it said could have undermined the prospects of the company.
These included its dispute with Senergy relating to the non-use of a drill rig by its subsidiary Zeus. Lochard has agreed to pay US$9 million compared with the US$12 million claims by Senergy.
Meanwhile, the deferred payment due to Lochard for the sale of its drilling fluids business has been agreed at A$13.9 million, taking the total amount to A$37.65 million, all of which has now been received.
The company also provided an update form the Athena field, where production rates are expected to remain at 12,000 barrels of oil per day beyond the end of the year.
Based on current production levels and oil prices, Lochard expects to have repaid the first US$14 million of the total US$28 million due to Gemini Oil and Gas Fund by next February with the remainder expected to be repaid by November 2014.
Lochard has also agreed a £3 million debt facility with Henderson, providing it protection from a working capital shortfall, caused for example by a delay in the shipment of oil from Athena.
This facility has a five percent fee payable on signing and drawdowns would have an interest rate of 12 percent per annum.
The company also said that The Canadian Imperial Bank of Commerce (CIBC) has been retained to assist in finding and concluding farm-out arrangements for both the Thunderball and Moby discoveries.
Broker finnCap had a mixed response to the update.
“While resolving (the Senergy dispute) and comments on the farm-out process are positive, the financing facility put in place is negative due to the structure and fees and the implication that the company is in a less strong financial position than previously thought,” said analyst at finnCap Will Arnstein.
“We believe the stock is cheap at current levels but risks to our valuation remain high.”
Back to Amerisur, the company has increased the previous six well campaign has been increased to eight new wells for the south and intermediate northern prospects and four new wells are planned for the northern prospects.
The company also announced the spudding of the Platanillo-4 well, which is currently drilling ahead at around 2,000 feet.
Earlier this year, the company spudded the Platanillo-3 well and that is now on commercial production - at a rate of 1,500 bopd.
Other popular stock exchange statements included compressor and power electronics specialist *Corac Group’s (LON:CRA)* agreement with what it said was a global oil and gas company to conduct a funded design study.
This study will focus on the use of its subsidiary Corac Energy Technologies’ (CET) compact compressor technology on an offshore gas production platform, which will be the first such project to be undertaken for this client.
“We are excited by the excellent advances being made by CET to expand its portfolio of applications across the energy and industrial sectors,” said executive chairman of Corac Phil Cartmell.
“It is also encouraging to see a new global energy major endorse the potential of CET's technologies.
“If successful, the opportunities for platform compression systems are very attractive, both for Corac and our partner.”
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