Flash Briefing: SA’s gas strike joy; WeWork opening in Jhb; Twitter drops 10%

By Alec Hogg

In today’s global business headlines:

  • South Africa’s wait for a meaningful oil and gas discovery ended yesterday when the consortium headed by Total announced a gas find of about a billion barrels of oil equivalent. The strike is in the offshore Southern Outeniqua Basin which runs parallel to the Southern Cape coast. The find is enough to cover South Africa’s imported fuel requirements for the next four years. Total has been prospecting the 18,000 square kilometres of an imaginatively named Paddavissie Fairway for some years, but exploration stalled in 2014 due to difficulties experienced in the harsh deep-water environment. It restarted in December, identified as one of Total’s biggest exploration targets for the year, with the French major drawing on experience gained in similar environments elsewhere. There is now hope for still more discoveries with four additional prospects identified within the Paddavissie Fairway exhibiting the same kind of geological results from 3D seismic and electromagnetic surveys. For context, a similarly sized discovery in the Mexican Gulf by BP last month made international headlines.
  • Twitter yesterday reported its first full year of profitability and record quarterly revenue of over $900m for the three months to end December, but even so the share price fell 10% to just over $30. Traders focused on a 1.5% drop to 321m users, reflecting continued stagnation in Twitter’s user base. They were also concerned about the forecast decline in revenue to around $750m for the first three months of 2019. The company’s co-founder and chief executive Jack Dorsey said efforts to reduce the amount of abuse on the platform is paying off through higher advertising. Twitter has announced that in future it will stop disclosing the number of users.
  • Odds of a no deal Brexit continue to tighten. Yesterday British Prime Minister Theresa May rebuked European Council President Donald Tusk who had spoken of a special place in hell for those who promoted Brexit without even a sketch of a plan to carry it out safely. Mrs May said that had caused concerns in the UK, but after a day of meetings with the EU yesterday she was confident that a deal was possible…PAUSE…Meanwhile the London Financial Times reports that the UK has drawn up a secret plan to boost the UK economy in the event of a no deal Brexit. It says levers which will be pulled to prevent an economic slowdown include slashing tariffs, cutting taxes and providing support for exporters.
  • In more South African related news, the world’s leading shared office business WeWork has announced it will be opening in Rosebank, Johannesburg during the third quarter of the year. WeWork, which is expanding rapidly in major cities worldwide has been negotiating its first African investment for over a year. But we understand that it had previously baulked at investing in physical property or long-term leases, a key part of its overall strategy. In its most recent round of fund raising the company was valued at $22bn with Japan’s SoftBank the biggest funder of one of the world’s hottest start-ups. WeWork says it has entered into a revenue share agreement with JSE-listed Redefine Properties at 173 Oxford Road, the site of the old Rosebank Mews which is currently being redeveloped to WeWork specs.