Market Report: Auction woes return to haunt First Calgary

First Calgary shares, which have lost 65 per cent of their market value since their peak earlier this year, were under selling pressure again yesterday after it emerged that the best bid the group had received during its failed auction was just 380p a share.

First Calgary shares, which have lost 65 per cent of their market value since their peak earlier this year, were under selling pressure again yesterday after it emerged that the best bid the group had received during its failed auction was just 380p a share.

Its stock shed 26.5p to 340p, having peaked at 1,050p in February, as word spread from meetings between First Calgary and City analysts of the far from eager reception the company had received from oil heavyweights when it put itself up for sale.

During the auction process, when First Calgary was said to have held talks with big oil players such as Spain's Repsol and Italy's Eni, the group's shares traded at between 800p and 900p, amid hopes for a sizeable cash takeover of the company. But it seems that although larger oil companies were interested in the company, they ascribed a much lower value to the group than investors.

Since the collapse of bid talks, First Calgary, which is focused on oil and gas exploration in Algeria, has decided to go it alone in the development of its prospects. After a recent fund raising, analysts believe the company has enough cash to see it through the next 12 to 18 months but not enough to fully develop any of its fields. According to Numis Securities, it is unlikely that First Calgary will be able to start production before 2009, and therefore the broker is far from bullish about the company's shares in the near term.

Elsewhere, bear raiders continued their attack on Patientline, down 4.5p to 73.5p. For a while they have spread rumours that the company needs to conduct a rights issue because it is struggling to generate enough cash from its hospital bedside terminals to service its debt burden.

The bears have certainly been successful in undermining Patientline shares, which over the past two weeks have lost 15 per cent of their value.

According to analysts who know the company well, the group is not struggling to service its borrowings and does not need to raise fresh equity. They noted that Patientline's recent results demonstrated that improving productivity in the UK and contract wins abroad were helping the company move towards becoming highly cash generative and profitable.

Among larger companies, J Sainsbury put on 4.75p to 290.75p as rumours that the Sainsbury family may sell its 35 per cent stake in the food retailer continued to circle dealing rooms. Likewise, hot money flowed into Matalan, 3.75p better to 182p, amid whispers of a bid for the discount retailer. Heavy trading in PHS, up 0.25p to 102.25p, prompted talk that a formal offer for the washroom services group will soon be announced. Last month, PHS admitted to having received a bid approach.

For the second successive day, a heavyweight broker got behind GlaxoSmithKline, up 2p 1,362p. On Tuesday it was Merrill Lynch and yesterday it was Lehman Brothers, which boasts the No 1 team of pharmaceutical analysts in the City. The US broker moved its clients into GSK and set a 1,510p price target on the stock.

Brambles Industries dropped 8.25p to 310p as Cazenove downgraded its rating to "in line" from "outperform" after a trading statement from the pallets group. The broker came away disappointed by Brambles' update, complaining that the sales growth achieved by the company in Europe and North America was weaker then it had hoped.

Blacks Leisure jumped 7.5p to 437p on whispers the retailer has had a great spring and a buoyant start to the summer. Like-for-like sales at the outdoor sports retailer are said to be well ahead of those seen last year. Meanwhile, spread-betting firms turned increasingly bullish on PartyGaming ahead of its float next week. Cantor Index quoted a grey market spread of 118p to 120.5p on the 782 million shares that will be sold on the Stock Exchange next week. David Buik, at Cantor Index, said: "We have seen some very aggressive buying of this IPO up to 119.5p. The show is very much back on the road."

Finally, Ovoca Resources, the Irish exploration firm, is understood to be collating the unpublished drilling data from its Russian gold and platinum work in the north-west of Russia, close to the Finnish border, with a view to a Stock Exchange announcement shortly. The data, collected over the past nine months, shows some promising signs of gold and platinum, apparently.

Ovoca established its interest in the Russian projects through the acquisition in March of 78 per cent of Norplats. Ovoca shares were off 0.13p to 7.77p yesterday as investors took profits from a recent spike. The company raised €1.69m (£1.12m) on Friday to fund drilling work and the transfer of Ovoca's shares to AIM.