Xcite Energy fails in attempt to appease exercised investors

10 April 2012
City Spy

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Never underestimate the power of an angry letter.

Punters in Xcite Energy have seemingly been bombarding its offices with missives recently, demanding answers after the North Sea explorer's share price lost almost 30% in less than a fortnight. The AIM-listed energy group decided today to bow to investors' demands in an attempt to calm their frayed nerves.

Saying it had received a "number of messages from shareholders expressing concern with respect to the current share price and requesting more information", Xcite posted a surprise update. At the start of the month the group dropped about 20% in one session after saying oil production from its Bentley field would be later than expected.

Today Xcite admitted it was still waiting for government approval for the field's development plans, but added it remained "optimistic this will be received shortly".

However, the announcement didn't exactly have the desired response. Xcite ended up dropping another 4p to 81¾p, with City voices saying hard evidence would be required to tempt investors back into the stock.

With less than two weeks until Christmas, trading desks were continuing to thin out, with one dealer noting his "train this morning was half-empty".

The market gossips were still plugging away, however, amid the revival of vague speculation Gem Diamonds - which was 4.4p higher at 185p - could become a takeover target, although traders dismissed the chatter.

In the recent past, the mid-tier precious stones miner has been subject to speculation that if retailer Graff Diamonds launches an IPO, the business's owner Laurence Graff might use the funds to make an approach for Gem.

It was a tough start to the week for the FTSE 100, which slipped 45.38 points to 5483.83 points.

The commodity stocks were weighing heavily on the benchmark index, with Eurasian Natural Resources Corporation sliding 37p to 647¾p. After reports over the weekend that the Serious Fraud Office was examining the company, the Kazakh digger denied it was the focus of a formal investigation but said that it was looking at current corruption accusations.

At the other end of the top-tier index the defensives were in charge, as Guinness-brewer Diageo and drugs maker GlaxoSmithKline advanced 11p to 1370½p and 11p to 1435p respectively.

The decision by CSR to pull its investment in its digital television operations received a rapturous response, with the chip maker rocketing 19.6p to 186.35p.

Not far behind was Mothercare - 10.7p stronger at 171.3p - as chatter that the firm could be about to receive an approach from private equity appeared to confirm last month's rumours that the struggling baby products retailer could be a bid target.

Angel Mining flew up 0.3p, or 36.36%, to 1.12p on AIM after the gold-digging tiddler released impressive yellow-metal production numbers.

The group also revealed it now had enough cash to meet its "operating costs and corporate overheads", and broker Fox Davies pointed out that this should "end recent rumours [it] will need a significant fundraiser at less than 1p in the near future."

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