Canaccord Genuity lowers target price on Tullow Oil

Analysts at Canaccord Genuity lowered their target price on exploration firm Tullow Oil from 75.0p to 67.0p on Wednesday following the firm's recent trading update.

Canaccord Genuity said Tullow's update highlighted early signs of progress on the Jubilee field, with a welcome bump in production after last year's investment, but also showed the scale of the challenge facing operations at its TEN asset as production fell "more rapidly than expected".

"Certainly, the improved field management and higher/more reliable gas offtake and water injection are tangible positive signs, but the company is still only in the foothills of oil production rejuvenation," said the analysts.

The Canadian bank highlighted that in 2022, Tullow's investment continues to, unsurprisingly, be weighted towards its Jubilee field, with three new wells on its "most important" asset.

However, Canaccord also acknowledged that spending on TEN was now picking up, with two new "strategic" wells planned for the second half of 2022 that were not expected to increase crude output until 2023.

"The result is that this year's gross production from Ghana is still expected to decline by circa 4% though the benefits are cumulative and should have more impact in following years," said Canaccord.

"Overall, we still think there is a lot to do to improve confidence in the long-term plan and this year is simply another step towards that goal."