Tullow Oil upgraded to ‘outperform’ by Credit Suisse

Oil company’s refocusing on ‘core competencies’ leads bank to upgrade the stock

A Tullow Oil drilling block at Lokichar basin in Turkana county. Photograph: Tony Karumbatony/Getty Images.

A Tullow Oil drilling block at Lokichar basin in Turkana county. Photograph: Tony Karumbatony/Getty Images.

 

Credit Suisse has upgraded its recommendation on Tullow Oil to “outperform” from “neutral” after the company “refocused on its core competencies”.

Analyst Ilkin Karimli raised the target price of the Ireland headquartered company to £2.10 from £1.745, implying a 34 per cent increase from Monday’s closing price. Before today, Tullow had 10 “buy” recommendations, 13 “holds” and 4 “sell” recommendations.

Mr Karimli wrote that the company had “been a victim of its own success, growing from a geographically-focused explorer to a junior oil producer and becoming inefficient in the process”. However, having refocused, the company is “high-grading its exploration efforts and having a more geographically focused approach on development”, he added.

While the upgrade is positive, Mr Karimli added that a principal risk for the company could come in the form of an adverse ruling on the maritime border dispute that would prevent the resumption of development drilling at the company’s TEN project off the coast of Ghana.