Yesterday’s North Sea discovery by Dana Petroleum may not have moved shares in the mid-cap oil producer as much as its predecessor – they gained 17 per cent on the day last month that it announced the West Rinnes find – but it was welcome, all the same.

As might be expected, the oil struck at the adjacent East Rinnes appears similar to the high-quality Brent crude already announced. Although the find looks slightly smaller in size than the 40 million barrels that the company had targeted, it is readily accessible.

With Dana already producing oil from the nearby Hudson field – which is less than five kilometres away – the task of integrating both Rinnes fields with its existing infrastructure and shipping it ashore should prove straightforward. Dana’s edge is that it benefits from low production costs in the North Sea: around $15 a barrel in development costs and $7 a barrel in operational expenditure.

Its other key strength is that its production is unhedged, such that it is able to take full advantage of current record spot prices. With the company’s average output expected to rise 50 per cent to 45,000 barrels a day during 2008, that benefit is significant. Initial estimates yesterday put the additional value of East Rinnes at 140p a share.

But as these latest discoveries indicate, Dana has come a long way from the days when its fortunes rested on high-risk finds in distant places, such as Indonesia and Russia. Around two thirds of its assets are in the North Sea. What it does have further afield can be deemed relatively low risk.

In the space of two years, it has lived up to its reputation as a canny trader of assets to assemble a portfolio of four prospective fields in Egypt. Indeed, the next drilling update from Dana should come from its West El Burullus project in the offshore Nile Delta, where it has a joint venture with Gaz de France. Given that the field is between two where BP and BG are already producing oil and gas, the chances of a discovery appear high.

The pace of Dana’s exploration programme – it is drilling 30 wells in total this year and next – also offers sustained interest: not least from the Eitri field in Norway, due this year. The problem is that, at £18.83, more than double their level last summer, much of that potential is already priced into the shares. Hold.

Southern Cross

It might seem unfortunate for Britain’s biggest nursing home operator to unveil first-half results on the day that Alan Johnson, the Health Secretary, calls for more elderly people to be cared for in their own homes, but that did not stop shares in Southern Cross gaining nearly 6 per cent as the company disclosed that it had secured a better-than-expected annual fee increase of 5 per cent for more than 85 per cent of its beds.

That update offset any concerns over a dip in occupancy rates in the six months to March 31 – which Southern related to a higher number of deaths over the winter period after an outbreak of norovirus – and prompted upgrades of profit forecasts. The rally in the shares also reflects an element of relief.

They have fallen 40 per cent from their November high, unsettled by the departures in quick succession of the chief executive and finance director, who had run the company since its 2006 float. Heavy boardroom selling in December soured sentiment still further. Then there are worries that Southern’s growth rate will slow as opportunities for big acquisitions become fewer and that falling commercial property values will hinder its sale-and-leaseback model.

On the latter front, Southern reassured that it is close to securing a deal on the £42 million of freehold properties it acquired in March’s purchase of Portland. The auction of Craegmoor Healthcare, owned by L&G Ventures, also suggests that there is still scope to grow.

Demographics remain on Southern’s side: the number of Britons over 85 will double over the next 20 years. However, with the second half accounting for 70 per cent of profits, and operational gearing high, the shares, at 383p, are best avoided for now.

Stobart Group

Stobart might be synonymous with a fleet of green-liveried lorries trundling along Britain’s motorway network, but it is also coming to mean ports and trains – and even aircraft.

In a burst of speed not usually associated with its “Steady Eddie” tag, Stobart has secured three acquisitions since joining the stock market last September through a merger with Westbury Property Fund. The common aim is to extend Stobart’s presence with “multi-modal” capabilities that should enhance the efficiency of freight movements and offer competitively priced contrasts to its corporate customers, which include Tesco, Procter & Gamble and Coca-Cola.

To this end, it operates a daily train between Daventry in the Midlands and Grangemouth in Scotland whose capacity is the equivalent of taking its lorry fleet off the road for two weeks. The same logic underlies the development of the port of Weston, near Runcorn, which could handle container traffic bound for the North West closer to its final destination, as well as its option to acquire Carlisle airport, where it seeks to expand its warehouse operation. That project could also enable Stobart to handle air freight at the same location.

The acquisitions made yesterday’s full-year figures largely irrelevant – albeit that underlying revenues were up 27 per cent and operating margins and utilisation rates rose. Equally, a rating of 19 times current-year earnings is of little use. However, at 139½p, Stobart has scale and an innovative strategy. Buy.

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