Report

Tullow Oil | Revising Brent forecast

We are revising our Brent price forecast to US$70/bbl for 2025 and to US$72.5/bbl for 2026 with US$75/bbl flat thereafter, from US$75/bbl held flat from 2025. Despite fears of oversupply there is little evidence of a glut emerging and evident pressure on US drilling signals the need for higher prices to maintain activity. We have also reduced our production forecast by c4% to reflect recent Jubilee underperformance. In combination, that leads to material reductions in our forecasts for 2025/26, although we continue to anticipate that Tullow has now returned to profitability with net debt falling. Our risked net asset value calculation drops to 53p, which is still five times the current share price and forward multiples remain exceptionally low. Successful refinancing would remove a key uncertainty that should allow the shares to trade significantly higher, we expect.
Underlyings
Tullow Oil plc

Tullow Oil is an independent oil and gas exploration and production company. Co.'s focus is on finding oil in Africa and South America. Co.'s primary activities include targeted exploration and appraisal, selective development projects and growing its production. As of Dec 31 2017, Co.'s portfolio included 90 licences in 16 countries. Co.'s operations are organized into three business delivery teams: West Africa; East Africa; and New Ventures. As of Dec 31 2017, on a working interest basis, Co. had commercial reserves of 245.7 million barrels of oil, 268.90 billion cubic feet of gas, and 290.5 million barrels of oil equivalent (petroleum).

TULLOW OIL PLC

Provider
Capital Access Group
Capital Access Group

Capital Access Group advises companies on effective engagement with investors. Our experienced team offers market-leading access with hard-to-reach investors, including smaller institutions, pension funds and private client fund managers. These under-serviced investors are located not only in London but across the regions of the UK and Europe. We have an unrivalled knowledge of this extensive audience, to whom our published research is distributed, as well as to larger institutions. We offer this service as part of an integrated investor communications strategy to promote a company’s investment story.

Our clients, ranging from AIM to FTSE 100 companies, benefit from our professional, long-term relationships with investors. Not only do we identify and target investors, we contact them directly and relay their views back to clients with analysis, interpretation and advice. This ensures that our clients are in control of their investor engagement. The objective is to improve the reach and engagement with investors, which in turn strengthens the share price.

Analysts
Colin Smith

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