Tullow Oil share price slides as Canaccord turns bearish on group

Kate Smith
  • November 11th, 14:58
  • Last Updated: October 21st, 14:50

Shares in Tullow Oil (LON:TLW) have fallen deep into the red in today’s session, with the Africa-focused producer suffering a downgrade at Canaccord Genuity. The move came after the mid-cap group updated investors on its recent performance earlier this week.

As of 14:30 GMT, Tullow Oil’s share price had fallen 5.14 percent to 249.20p, underperforming the mid-cap FTSE 250 index which is currently 1.23 percent worse off at 17,442.49 points. The group’s shares have gained more than a quarter over the past year, and are up by some 50 percent in the year-to-date.
Canaccord Genuity turned bearish on Tullow Oil today, trimming its stance on the shares from ‘hold’ to ‘sell’, while raising its price target on the stock from 220p to 230p. The analysts explained that the issues highlighted in the group’s trading update earlier this week in relation to the TEN fields offshore Ghana raised a ‘hint of concern’.

The Africa-focused oil explorer said this week that it was set to turn free cash flow positive, but trimmed its production guidance following start-up problems with the newly-commissioned TEN fields.
“More generally, we remain concerned about the concentration of cashflow generation in Ghana,” Canaccord said, as quoted by Sharecast. “Over the next two years we expect over 70 percent of the company’s production to come from Ghana, where operating costs are relatively low, derived from less than 20 production wells in Jubilee and TEN.”
The analysts added that Tullow appeared more robust than some of its highly leveraged peers, but concluded that it is not enough to be an attractive investment, short of significant sustained OPEC production cuts.
Barclays remains ‘overweight’ on Tullow, with a price target of 340p on the shares, while Credit Suisse has reaffirmed the group as a ‘neutral,’ valuing the stock at 250p.
As of 15:03 GMT, Friday, 11 November, Tullow Oil plc share price is 247.37p.

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