Falkland prospects raise black gold and bring hope to sector

Shares in Rockhopper Exploration, which is one of a gang of UK oil explorers searching for crude in the remote British territory, surged to an all-time high today after the company raised its estimates for its find in the North Falkland Basin and said that further upgrades were possible.

The stock — a favourite of retail punters — climbed 82p to 322p, a gain on the day of more than a third.

Earlier this week, its shares plunged amid rumours that poor-quality heavy oil was coming out of the Sea Lion well, but today the company said that tests on samples brought back to the UK showed that it was "medium gravity" crude oil.

According to independent forecasts, the estimate for recoverable reserves has risen from 170 million barrels to 242 million.

Rockhopper's update inspired optimism throughout the sector, with investors hoping that others would soon strike lucky.

Desire Petroleum, which has prospects near Rockhopper, gained 20p to 102½, and AIM-listed Falkland Oil & Gas climbed 22p to 210p.

Shares in London extended their winning streak into a second day, pushed higher by a strong showing from the heavyweight oil stocks, especially crisis-struck BP.

The FTSE 100 climbed 43.79 points to 5254.97. In morning trade, investors were nervously awaiting unemployment figures from the US, the closely watched non-farm payrolls, for an update on the health of the world's biggest economy.

BP was the benchmark's best performer, advancing 17.7p to 449.5p, as the oil giant made progress in its bid to capture some of the oil gushing out of its ruptured deep-sea well in the Gulf of Mexico.

Icap claimed second place, rising 14p to 405.3p, thanks to a push from Credit Suisse. Analysts at the bank said that the money broker's electronic trading volumes for May were very strong, and has reiterated its buy rating on the shares, with a target price of 485p.

Struggling sportswear retailer JJB Sports has found a big fan — just ahead of the start of the World Cup. Panmure Gordon says that the football tournament, which starts next week, will boost sales.

But they reckon that the real prize for JJB is the 2012 Olympic Games in London, which should push up sports-related spending in the UK in the longer-term. Analysts also say that there is "clear evidence that a recovery in operational performance is under way" at JJB. They have a 25p price target for the shares, which marked time at 17p. But Panmure also warns that one company which should be a loser from the World Cup is Luminar, as revellers shun its nightclubs in favour of watching the footie.

The stockbroker advises dumping shares in the owner of the Lava & Ignite and Oceana brands and has slashed its price target from 20p to 12p.
Analysts warn that Luminar is likely to be loss-making in terms of profits before tax, making it hard — unless trading picks up — for Luminar to cut its debt pile. Its shares were flat at 15p today.