Cape shares jump after Azerbaijan oil deal sealed

SHARES in energy services group Cape rose five per cent last night on the news it has set up a joint venture with Azerbaijan's state oil company to develop the country's oil and gas sector.
By The Newsroom
Published 1st Jul 2010, 22:40 BST
Updated 1st Jul 2010, 22:40 BST

Cape, whose UK operations are based in Wakefield, said it has formed the partnership with the State Oil Company of Azerbaijan (Socar). The new company will be 49 per cent owned by Cape and 51 per cent by Socar.

Cape's chief executive Martin May said: "We are delighted that Socar has chosen to enter into this joint venture with Cape.

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"Azerbaijan is a key country for the growth of Cape's CIS business owing to its large oil and gas deposits and the significant investment in the region."

He added that a partnership with the state oil company will provide Cape with high level access to major projects.

The agreement was signed in Azerbaijan's capital Baku by Socar president Rovnag Abdullayev and Cape's regional director for CIS, Mediterranean and North Africa, Guy Rackham.

Cape has had a presence in Azerbaijan for over ten years, both directly and through its acquisition of PCH in 2007.

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Cape said the joint venture will have the resources to meet the expected increased demand for its specialist non-mechanical services including access and insulation.

It believes there will be significant opportunities in coming years from new projects, maintenance and shutdown activities relating to the development of the Azeri-Chirag-Guneshli oil project and Shah Deniz gas condensate development project. Last night Cape's shares rose 10p to 210.25p.

The news is a boost for Cape following the announcement last week that takeover talks for the group had been terminated.

"Following subsequent discussions with that third party, all talks have now been terminated by the company, " Cape said in a brief statement.

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Shares in Cape, which provides services such as fire protection, coating and cleaning for industrial assets, had jumped as much as 31 per cent over the course of the previous week following confirmation it had received a preliminary approach.

Cape is predicting a return to higher growth in 2011. In May the group said it had made a solid start to the year with strong trading in the Far East offsetting a slowdown in the Middle East.