Analysts react to Tullow Oil turmoil

Multinational oil and gas producer Tullow Oil plc (LON: TLW) today saw analysts reaffirm their conservative stances on the Company’s stock, ten days on from the tumultuous departure of its Chief Executive.

Speaking on the departure, interim Executive Chair Dorothy Thompson, stated, “Despite today’s announcement, the board strongly believes that Tullow has good assets and excellent people capable of delivering value for shareholders.”

“We are taking decisive action to restore performance, reduce our cost base and deliver sustainable free cash flow.”

“The board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations,”

Today, the Company announced that it had exercised its back-in right for a 10% stake in Gabon’s Dussafu production-sharing contract (PSC), though the amount payable remains under dispute. Having signed a deed of novation and amendment, and conditional upon the deal being completed, other parties’ stakes will drop to 73.5% for BW Energy, 9% for Gabon Oil Co and 7.5% for Panoro Energy.

Responding to the eventful couple of weeks from Tullow Oil, “UBS (SWX: UBSG) today reaffirms its neutral investment rating on Tullow Oil PLC and cut its price target to 60p (from 220p).”

Further, “Jefferies International Group (NYSE: JEF) today reaffirms its hold investment rating on Tullow Oil PLC and cut its price target to 65p (from 168p).”

If we try hard to search for a chink of light, it was offered courtesy of Jonathan Smith of Motley Fool, who was somewhat upbeat while comparing Tullow to another floudnering commidity company – Sirius Minerals (LON: SXX).

Smith said, that Tullow Oil “still holds a market capitalization, which it can use to leverage (be it through bank funding, stock buybacks, etc).”

“Further, Tullow could be a smarter play for an investor looking to buy on the cheap as it is a more diversified company than Sirius. Tullow has 67 producing oilfields, and so while output production forecasts have come lower, it will likely look to see how it can make up some shortfall from some of the oilfields that are performing well.”

Following today’s events, the Company saw its shares dip 2.66% or 1.74p to 63.64p per share 19/12/19 14:03 GMT. Within the last few days, Peel Hunt analysts downgraded their stance on Tullow Oil stock, from ‘Add’ to ‘Hold’. The Group’s market cap is £900.64 million, their p/e ratio is 14.02 and an inviting dividend yield of 5.81%.


Previous articleRolls Royce unveil one-seater electric plane
Next articleComcast shares flat as Cats receives a less than purrfect reception
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.