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

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