Jefferies reiterates 'hold' rating on Tullow Oil ahead of AGM
Analysts at Jefferies kept their 'hold' recommendation and 245p target price on shares of exploration and production outfit Tullow Oil ahead of the company's AGM trading update on Thursday, even as they called attention to Exxon Mobil's decision during the previous week to send two rigs to appraise the Hammerhead discovery, offshoe Guyana, labelling it "significant".
That was because Hammerhead was thought to extend onto Tullow's adjacent updip Orinduik Block.
ECO Atlantic's updated competent person's report had pegged the gross prospective resources at Orinduik at between roughly 1.0-4.0bn barrels of oil equivalent.
Of that figure, only 11mmboe were linked to the expected extension of Hammerhead onto Orinduik, Jefferies pointed out.
Tullow's Ugandan FID and production at its TEN field were also catalysts for 2019, they said.
Nonetheless, the analysts noted that Tullow's Guyanese operations were the "most important catalyst" for the group in 2019.
"Deleverage is material but TLW needs a new commercial growth asset. Guyana’s Orinduik block has been materially de-risked by the Hammerhead-1 well which can be proved by the Jethro exploration well expected to spud in June 2019."