Centrica feels wind in its sails after farm disposal

Peter Stiff: Market report

Skegness may be bracing, but perhaps it was that very quality that allowed Centrica to sell half a wind farm only five miles off the coast of the Lincolnshire seaside resort yesterday.
Shares in the British Gas owner rose 3.2p to 276.4p after it said that it had sold a 50 per cent stake in the 270-megawatt offshore wind farm to Dong Energy and Siemens Project Ventures for £50 million.
The two European groups will also reimburse Centrica for half of the development costs incurred to date. The total investment in the project is expected to be about £750 million, with Centrica’s share being £375 million. Construction of the wind farm is planned to start in 2010, with first power expected in the second half of 2012.
As a result of the deal, the project will use new wind turbines, which are said to be more powerful. Centrica will continue to lead the project and its British Gas business will take 75 per cent of the wind farm’s electricity production.

Dong, which is an experienced player in offshore wind projects, has also agreed to sell a 25.1 per cent stake in its 367MW Walney offshore wind farm in the Irish Sea to Scottish & Southern Energy, up 2p at £11.47, for £39 million.
Overall, the FTSE 100’s so-called Santa Claus Rally continued in earnest, with the blue-chip index briefly trading above its highest level in more than a year, before falling back in the afternoon after disappointing American new home sales data. It closed 43.72 points up at 5,372.38 after another day of weak volumes. The market will open for half a day today before closing for Christmas.
The mining sector was the biggest driver of the gains, responsible for eight of the index’s top ten risers, amid higher metal prices. Copper, for instance, rose nearly 2 per cent ahead of a strike in Chile, one of the world’s top miners of the metal. There was also speculation of increased demand from China and the United States.
Eurasian Natural Resources was the biggest gainer, climbing 33p to 901p. Xstrata rose 29½p to £10.71½ and Rio Tinto was up 80p at £32.96. Sentiment towards the sector was also buoyed after Glencore, the Swiss commodity trader, signalled that it was likely to seek an initial public offering that would value it at $35 billion.
Oil groups such as Royal Dutch Shell, up 29p to £18.97½, and BP, up 6.8p at 604.3p, also gained on the back of stronger oil prices, which rose after inventory data showed that crude oil stocks fell much more than expected last week. However, Tullow Oil fell 11p to £12.69, despite an upbeat drilling update.
BT Group was one of the biggest fallers, ending the day down 4.3p at 137½p, as the telecoms group traded without rights to its latest dividend.
In the FTSE 250, Premier Oil fell 11p to £10.79 after it plugged and abandoned a well in Vietnam after failing to find significant hydrocarbons.
BSS also slid, closing 2p down at 238p, after Goldman Sachs revised down its earnings estimates for next year and 2011, citing pressure on margins in its domestic and specialist division.
• New York: Disappointing data on new home sales kept shares largely flat on Wall Street. At the close, the Dow Jones industrial average was 1.51 points up at 10,466.44.