Heritage Oil on a rocky ride in fundraising to buy Genel

A total of 25.4 million shares, or almost 10% of the company, will be placed with institutional investors after a bookbuilding exercise is carried out by JPMorgan Cazenove. Heritage also plans to change its name after the acquisition to HeritaGE Oil.

Heritage is run by former mercenary Tony Buckingham and has recently struck it rich in Uganda with its partner Tullow Oil, down 40p at 918p.

But not everyone has had the same run of form in Uganda, which has been tipped by some as the next Saudi Arabia. Shares of Tower Resources have slumped 1.62p to 2.12p with joint venture partner Global Petroleum losing 2.37p at 6.12p after failing to find oil in commercial quantities at its Iti-1 exploration well in Uganda's EA5 licence.

Global had been chased up from a high of 4.38p since October last year, while Tower was trading as low as 1.88p in December.

The price of oil may now be trading above $70 a barrel on world markets, but Goldman Sachs warns that the industry will see structural decline in non-Opec supplies accelerate unless companies dip into their pockets and spend more on new exploration.

The US broker has also been revising its rating on major players in the sector. It has a buy rating on Salamander, 2¼p lighter at 189½p, and Premier Oil, 15p cheaper at 1152p, and has raised its target on Salamander from 240p to 243p, and on Premier from 1397p to 1423p.

Goldman has neutral ratings on Tullow and Soco International, 13p off at 1244p, but has raised its sights on Tullow from 976p to 996p and Soco from 1399p to 1428p. Dana Petroleum, 3p better at 1277p, is rated neutral, with its target lifted by 20p to 1479p. Cairn Energy, 100p off at 2359p, is also seen as neutral with target raised from 2796p to 2868p.

Shares generally made a lacklustre start to the week. Royal Ascot starts tomorrow which could take investors' minds off a clutch of economic indicators due out this week. City punters on the junior market may be tempted to risk a few bob on Main Aim in the 2.30. The FTSE 100 index fell 84.41 to 4357.54. Wall Street was also in retreat this afternoon ahead of a heavy week of economic news for investors. The Dow fell 147.4 to 8651.8.

Heavily weighted mining shares suffered a sell-off and dragged the rest of the market with it after commodity prices softened as investors switched to the dollar, instead. Lonmin dropped 127p to 1314p, Rio Tinto 180p to 2936p and Xstrata 38p to 722p.

Barclays fell 6¼p to 285¾p with Standard & Poor's affirming its AA-/A-1+ rating negative outlook on the shares after its disposal of Barclays Global Investors to Blackrock for £8 billion.

The second quarter of this year could produce some rich pickings for Anglo-Swedish drugs giant AstraZeneca, Citigroup says, because it could produce strong sales growth of its best selling drugs, such as Crestor, Toprol XL and Casodex.

Crestor Rx, used to treat high cholesterol, has seen growth accelerate, while the continuing absence of generic rivals for Toprol XL, its blood pressure treatment, and Casodex, used in the fight against prostate cancer in the US, has also been beneficial. As a result, Citigroup has raised its rating on AstraZeneca from hold to buy and jacked up its target from 2500p to 2900p. The shares rose 17p to 2646p.

Mears Group, which missed out on promotion to the FTSE 250 index in March by just a penny on its share price, was today making up lost ground with a rise of 3¼p to 246p. This followed a visit by brokers to the social housing repairs and care-home services group by a posse of brokers last Friday. Arbuthnot Securities has repeated its "strong buy" rating on the shares, while buy ratings have also been issued by KBC Peel Hunt and Altium. Arbuthnot is forecasting a 15% hike in pre-tax profits to £23.2 million this year, while Mears' own broker Collins Stewart remains happy to buy the shares.

The big pub chain operators were left hungover by news of Punch Taverns' share placing to raise £350 million. It fell 32½p to 116p. Rival Enterprise Inns fell 13¼p to 136¾p, JD Wetherspoon shed 20¼p at 373½p and Greene King 13¼p at 409¼p.