Tullow Oil share price rallies as partner sells some assets to Maersk

Shares in Tullow Oil (LON:TLW) have soared more than 15 percent in today’s session after the company’s partner Africa Oil Corp sold stakes in licences in Kenya and Ethiopia, where the London-listed group operates some blocks, to Maersk. The move has prompted positive comments from analysts.

As of 13:33 GMT, Tullow Oil’s share price had added 15.35 percent to 251.70p, topping the FTSE all-share index. The stock, however, has lost more than half of its value over the past year, reflecting ongoing weakness in the oil price.

Maersk Oil announced in a statement today that it had agreed to acquire half of Africa Oil Corp’s shares in three onshore exploration licences in Kenya and a further two in Ethiopia, for an upfront farm-in payment of $365 million (£242 million), and subsequent payments of up to $480 million (£318 million), contingent on the size of the resource after final appraisal and the agreed timetable for first oil. Four of the blocks are operated by Tullow Oil.

“The news for Tullow is very positive and has brought buyers back today,” Atif Latif, director of trading at Guardian Stockbrokers, was quoted as saying. “We see Tullow as one of the material(ly) undervalued names in the oil space that has been weak due to the commodity weakness over the last year.”

Analysts from FirstEnergy Capital meanwhile commented that the move was “a big vote of confidence on the quality and materiality of these assets”. Separately, Morgan Stanley, which has an ‘overweight’ rating on Tullow, boosted its price target on the London-listed group from 275p to 285p.

Today’s rally in Tullow Oil’s share price comes after last week the stock jumped on the back of an upbeat report from one of the firm’s partners at its flagship TEN and Jubilee projects in Ghana. The London-listed energy producer is due to update investors on its recent performance on Wednesday.