The past month has seen a significant fall in oil prices. Having flirted with the $100 per barrel mark for the first time since the summer in early November, Brent crude is now closer to $80 as traders fret about the impact on demand of a slowdown in the global economy.

Renewed hopes of a loosening of Chinese Covid restrictions gave the crude market a bit of relief at the start of December but it has proved short-lived.

Little wonder that talk is returning of OPEC deepening production cuts, even if a meeting on 4 December saw the producers’ cartel stick with the planned 2% cut for the time being.

The introduction of a cap on Russian oil prices of $60 per barrel by G7 nations and a European Union ban on Russian seaborne oil imports further complicates the picture. However, the $60 cap is above the price at which Russia’s oil is currently selling – attracting criticism from Ukrainian leader Volodymyr Zelensky. And some EU countries have been granted exemptions on the import ban.

Given this situation and the outlook for growth, the actions of OPEC will probably have more bearing on the future direction of oil prices.

ITHACA’S FLOP STOCK MARKET RETURN

The weak oil price backdrop has contributed to a difficult second coming for Ithaca Energy (ITH) after it re-joined the stock market on 9 November.

Talk it might earn a place in the FTSE 100 has proved premature as the shares have dropped 28% on their 250p listing price.

Ithaca’s shares previously traded in London before being taken over by Israeli conglomerate Delek Group (DLEKG:TLV) for £510 million in 2017. Since then, Ithaca has become one of the largest producers in the North Sea thanks to a series of acquisitions.

Proceeds of £262.5 million from the recent stock market listing will be used to pay debts owed to Delek which remains the controlling shareholder with an 89.4% stake. In its first update, covering the nine months to 30 September, Ithaca posted adjusted post-tax profit of $391 million and committed to its ‘firm expectation’ of paying $400 million in dividends in 2022.

A firm set to bid farewell to the UK stock market is Tanzanian gas producer Wentworth Resources (WEN:AIM) which has agreed to be taken over by French firm Maurel & Prom (MAU:EPA) in a £61.7 million deal – a 30% premium.

Despite consistently delivering on operations and rewarding investors with generous dividends, Wentworth has struggled to earn much credit with the market, and this makes acquiescing to the deal an understandable move.

‹ Previous2022-12-08Next ›