Tullow dips following profit taking

Tullow Oil is in the red this lunchtime as dealers decide to close out their long positions after yesterday’s gains.

The oil company performed well in yesterday’s trading session as it revealed positive results from its operation in Kenya. It stated that it believes there are 250 million barrels of oil at the Kenyan site, which is more than double than the original estimate. The operation in Ethiopia also provided investors with positive news as gas was discovered.

The investment bank Jefferies welcomed the news, describing it as ‘further positive well results’ which could turn the ‘negative market sentiment around’. The finance house has placed a price target of 1500p on the stock. Not all investment banks have the same outlook for the oil company, however; Investec are worried that they may have to increase their level of debt in order to fund additional explorations which may push up their debt to equity ratio.

The current share price of Tullow Oil is 1058p, and Investec have issued a price target of 930p. The share price has lost over 10% in the past quarter but if the company keeps posting positive well results, we could see the price move towards the 1100p mark.

Tullow oil chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.