Tullow Oil share price: what’s the latest after its full-year production downgrade?
The UK-based oil and gas company was forced to downgrade its full-year production guidance last week after drilling at its site in Ghana was suspended, leading analysts to downgrade the stock.
Tullow Oil has seen its shares nosedive nearly 30% after it announced last week that its full-year production is set to come in below its previous guidance.
Full-year 2019 oil production is forecast to average around 87,000 barrels of oil per day. This is slightly below previous guidance primarily due to weaker-than-expected production performance at its operations in Ghana, with drilling suspended at its TEN fields site in July.
‘In West Africa, our non-operated assets continue to perform well,’ Tullow Oil CEO Paul McDade said. ‘However, Ghana production has not met our expectations this year and we are working closely with our Joint Venture Partners to ensure that both fields perform to their potential.’
JP Morgan and Jefferies downgrade Tullow Oil
This month, after a disappointing trading update last week, analysts at JP Morgan Cazenove downgraded the stock to a ‘neutral’ rating, while Jefferies International lowered its grade from ‘buy’ to ‘hold’.
The pair also downgraded their target price for the stock, with JP Morgan Cazenove and Jefferies issuing a price of 249p and 168p respectively.
Based on Tullow Oil closing at 144p on Monday, despite both banks downgrading the stock, the pair still believes its share price has a potential upside of between 16% and 72%.
Recent discoveries fail to bear fruit for Tullow Oil
Not only did the company have to downgrade its full-year production guidance, but Tullow Oil also announced that recent discoveries in Guyana contained low quality, heavy, sour oil which have significantly less commercial value.
The oil and gas company remains optimistic about the larger basin in Guyana and its potential to become a driver of profit and source of future cash flows, but even if the site does eventually bear fruit it will take some time for new wells to come online.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.