The big news today for shareholders in Jersey Oil & Gas (LON:JOG) is that it is at an advanced stage in agreeing to farm-out a material interest in its Greater Buchan Area.

It has lit up the group’s shares, which have jumped 23% on the news, to around 188p.

Jersey Oil & Gas is a UK exploration and production company which is focused on building an upstream oil and gas business in the North Sea.

It holds a significant acreage position within the Central North Sea referred to as the Greater Buchan Area, which includes operatorship and 100% working interests in blocks that contain the Buchan oil field and J2 oil discovery and an 100% working interest in the P2170 Licence Blocks 20/5b & 21/1d, that contain the Verbier oil discovery and other exploration prospects.

This positive news, which could see finalisation by the end of April, could also see an interest being taken in the company’s surrounding exploration assets.

The other party has not as yet been named.

Brokers very keen

Analyst Daniel Slater at Zeus Capital has a very positive outlook on the group’s prospects and upon his company’s total risked net asset value has a massive 856p price objective.

Analyst Brendan Long at WH Ireland believes that it is ‘game on’ for the energy crisis and that the timing in respect of the commodity price cycle is excellent for both the counter party and Jersey Oil & Gas. He is also very positive about the news.

At finnCap their analyst Jonathan Wright considers that even under his conservative assumptions on the group’s prospects that there is a significant upside potential for the group’s shares from a successful deal. He has a risked valuation of 660p a share.

CEO Andrew Benitz stated that:

“We are pleased to be in advanced exclusive negotiations with a well-funded industry heavyweight and whilst there can be no guarantees of a successful conclusion, we are aiming to finalise the farm-out in the near future and look forward to updating shareholders shortly.”

The FTSE 100 was building momentum on Thursday with London’s leading index grinding out a near 1% gain after the heavy NASDAQ entered a bull market overnight in US trade.

Technology shares were spared the volatility caused by the banking crisis, and in some circumstances were even seen as a safe haven.

Microsoft and Apple – with a combined $3.7 trillion market cap – are up 17% and 23% respectively so far in 2023. Chip-maker NVIDIA is the NASDAQ 100’s top riser this year, adding a whopping 86% since the start of the year.

The NASDAQ’s milestone has grabbed headlines on Thursday and added to improving sentiment around the banking sector.

“Investors continued to bid up stocks as worries about the banking system faded away, with the FTSE 100 having risen nearly 3% since the start of the week. The market was lifted by a broad range of sectors including retail, banking, travel and property,” said Russ Mould, investment director at AJ Bell.

“That suggests confidence is rebuilding among investors who have been shaken by the rapid unfolding of issues concerning a handful of US and European banks, and as expectations for interest rates once again swerved in a new direction.”

The FTSE 100’s top gainers included names such as Ocado and JD Sports which have often led either declines or advances in the index in recent months.

Ocado was up 7% on Thursday and is now 25% higher than the mid-March low.

FTSE 100 ex-dividend

FTSE 100 fallers were dominated by companies trading ex-dividend. Mondi, Smith & Nephew, abrdn, Taylor Wimpey, Aviva and Phoenix Group all traded ex-dividend on Thursday.

Apart from the stocks trading ex-dividend, there were only 10 FTSE 100 companies in negative territory on Thursday at the time of writing.

Decliners included defensive stocks such as BAE Systems, British American Tobacco and Imperial Brands.

Lloyds shares were sent sharply lower in the recent banking crisis as FTSE 100 banks sank on concerns we could be entering a financial crisis reminiscent of 2008.

These fears were quashed this week by the Bank of England Governor as he dismissed the current saga being anywhere near as severe as the 2008’s crisis.

This sparked a wave of optimism through markets and banking stocks globally have rallied from their worst levels.

“With banking worries put on the back burner for now, with no further stresses in the system emerging, investors’ appetite for a bit more risk is returning,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown, earlier this week.

The risk investors are prepared to take on is being channelled into US and European banks. The broad global banking sector is now significantly off the worst levels. The S&P Global 1200 Financials Sector Index is around 4% higher than last week’s low.

Lloyds shares

The collapse of SVB which spilled over into Europe and culminated in the takeover of Credit Suisse by UBS send waves through global banking shares. Many now trade at large discounts to recent highs.

This includes Lloyds shares which are over 10% below 2023 highs. This in itself is by no means a buying signal but for long term holders, the current Lloyds share price provides a more attractive entry point than it did just a month ago.

Lloyds now trades at just 6x earnings, lower than Natwest’s 6.5x earnings but higher than Barclays 3.5x. Banking earnings multiples have persistently been below the FTSE 100 average for many years now so comparisons against the FTSE 100 benchmark are of little use.

After a period of rising interest rates, the bank themselves said they see their net interest margins plateauing in the coming year. This would suggest capital appreciation will be a result of multiple expansion, as opposed to earnings growth, in 2023.

Lloyds dividend

One reason why investors may be attracted to Lloyds shares is the dividend. And the income case is compelling.

Lloyds currently yields 5.1% – among the FTSE 100’s top 20 yielding stocks based on historical payouts. Their dividend is covered 3.3x meaning there is plenty of scope for dividend hikes in the future.

In their recent annual report, Lloyds said: “The Board remains committed to future capital returns. Going forward, the Board intends to maintain its progressive and sustainable ordinary dividend policy alongside further returns of surplus capital at the end of the year as appropriate.”

Risks

Although Lloyds shares offer relative value and a progressive dividend, there are of course risks to consider. The banking crisis is not yet completely offer. A rout in Deutsche Bank shares due to a single bet on their Credit Default Swaps last week highlights nervousness around European banks.

In addition, the health of the UK economy – the UK property market in particular – could impact Lloyds share price in the coming months.

The point of care molecular diagnostics company Genedrive (LON:GDR) has announced that the UK’s National Institute for Health and Care Excellence (NICE) has given positive final guidance for its MT-RNR1 ID Test kit to be used by the NHS.

The NICE Early Value Assessment programme selects and recommends new technologies that will make a real difference to patients and provide the most value for the NHS.

The MT-RNR1 ID Kit rapidly and accurately identifies babies with the MT-RNR1 genetic variant who may be at risk of hearing loss if given aminoglycoside antibiotics.

It is stated that no other test is available to provide results quickly enough to inform decisions on antibiotic prescribing in emergency care.  

Genedive has been developing and commercialising a point of need molecular diagnostic platform that is low cost, rapid, versatile, easy to use and robust.

It is needed for the diagnosis of infectious diseases and for the use in genotyping which is the patient stratification process, for detection of pathogen and other indications.

The AIM quoted group has assays on the market for the detection of MT-RNR1, HCV, certain military biological targets, a high throughput SARS-CoV-2 assay and a point of care test for Covid-19.

It is also currently developing a genetic test for CYP2C19 metaboliser status.

NICE’s recommendation on using the Genedrive® MT-RNR1 test in NHS England and Wales through its EVA program will support additional data generation requirements whilst the test is being used routinely within NHS sites. It is anticipated that this data collection process will be several years in duration. 

CEO David Budd stated that:

“We are appreciative of the thorough review conducted by the NICE team. The final report issued today entirely reflects the preliminary conclusion published in February.

As we continue with commercial roll out and product adoption, the NICE EVA framework will give us the opportunity to support specific performance and impact data that NHS users and commissioners may look for in future guidance.

NICE, whose guidance is formally applicable to the NHS in England and Wales, is an internationally respected health authority and the tools and data supplied in its review will be relevant to the rest of the United Kingdom and to the other international markets which we are now accessing.”

Prior to today’s news the £34m capitalised group’s shares closed 8% lower last night at 36.75p.