STOCK WATCH: Fears grow that BP’s Alaska sale may prove half-baked
With oil prices tumbling, investors will be glued to the first-quarter results due out from BP and Shell on Tuesday and Thursday respectively.
Shares in the two oil giants have taken a hit since the oil price slumped amid a collapse in demand and fears over the lack of storage space for excess barrels of crude being pumped out during the lockdown.
So it will be intriguing to see the toll that this is taking on Britain’s largest listed oil firms.
Shares in Shell and BP have taken a hit since the oil price slumped amid a collapse in demand and fears over the lack of storage space for excess barrels
There is growing concern that BP might not get the £4.5billion sale of its Alaskan assets over the line in the current climate, for instance.
BP and its buyer, Hilcorp, said earlier this month that the deal was still on.
The Alaskan oilfields and pipelines are part of a total £12billion of assets that BP wants to sell by the middle of next year to pay down debt, so that target might be at risk.
It’s not all bad news though. Analysts at the Swiss bank UBS reckon Shell could cut more costs before it has to take an axe to the dividend.
And I’m told the oil trading divisions of both companies have cashed in on the oil price volatility.
St James’s Place
Wealth giant St James’s Place has the chance to set the record straight on Thursday, when it gives a first-quarter update after coming under attack from short-sellers.
ShadowFall, a research outfit led by Matthew Earl – a former City analyst known as the ‘Dark Destroyer’ – claimed the company was suffering so much in the current crisis that it might have to cut its dividend.
The risk, he said, was the ‘highest it has been in recent history’.
Shares in another ShadowFall target, Future, the publisher of What Hi-Fi? and Cycling News magazines, slumped on the back of his critical report, so keep an eye on this one.
One company that has already put its dividend on hold is Travis Perkins, the builders’ merchant.
The company was quick to cut its payout last month and it has put a split from its Wickes business on hold too.
A trading update on Tuesday will shed light on how much sales have fallen during the lockdown at Travis Perkins
It also said it could look to cut costs to deal with a further sales slump.
A trading update on Tuesday will shed light on how much sales have fallen during the lockdown given that many construction firms have shut up shop.
Scribblers at UBS estimate that Travis Perkins might have to slash spending to £90million this year to deal with the fallout from the crisis.
That would be £53million less to spend than last year.
Former Tory MP Sir Tony Baldry’s aptly named security company, Westminster Group, is due to reveal record first-quarter results on Thursday, but the share price has still suffered in recent weeks from the coronavirus pandemic.
That’s because it provides security services to Freetown International Airport in Sierra Leone, which is shut because of the outbreak.
However, the company has seen a surge in demand for its fever screening equipment during the crisis.
I hear Westminster is poised to launch a marketing campaign that could help boost sales of its testing kit further and – investors will hope – boost its shares, too.