Friday tips round-up: Ophir Energy, Insurance sector

21st Mar 2014 07:18

Ophir Energy's remaining 20 per cent Tanzania stake is being valued at half of what the other 20 per cent was hived off for towards the end of last year. In fact, it is owed and should soon receive 1.25bn dollars from Pavilion Energy for the stake which it acquired. That comes on top of another 667m dollars which are in the bank. Amongst the other "worthless" assets belonging to the oil explorer are Gabon - although it is admittedly untested - and some other frontier licences in places such as Kenya, Somaliland and a license off Seychelles. Lastly, there is also some acreage off Equatorial Guinea which may contain close to a sixth as much gas as those Tanzanian assets. As well, some upcoming drilling results could spark some progress in the shares, if successful. Should the shares remain at their current level and those numbers continue to stack up then, at some stage, one of the majors should come knocking, writes The Times's Tempus. Avoid the insurance sector. The Budget effectively killed of annuities, so while the larger insurers may be able to adapt the smaller specialist groups will face a difficult time. That is because even if annuities are still a sensible option for those who seek guaranteed income the greater choice will lead to keener pricing. Particularly hard hit have been recently floated companies such as Partnership Assurance and Just Retirement. Broker Panmure Gordon believes the latter will see sales drop by about 80% from current levels. Amongst the biggest players, Killik&Co. believes Legal&General is most exposed, as it derives around 25% of its operating profits from annuities in the UK. Aviva and Prudential, on the other hand, might take between a 3% and 4% hit to full-year profits. Lastly, St James's Place and Old Mutual should be able to compensate for the impact of the reforms as they are not as exposed to annuities and should be able to attract new business, says The Daily Telegraph's Questor team. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB