US broker Morgan Stanley has downgraded global oil and gas explorer Tullow Oil’s (LON:TLW) target price following disappointing news about two West African offshore wells yesterday.
UK-headquartered Tullow, which has interests in 23 countries worldwide, revealed water-bearing reservoirs yesterday on its Mercury-2 exploratory appraisal well in Sierra Leone and the Kosrou-1 exploration well in Côte d’Ivoire, prompting a drop in the share price.
However, Morgan Stanley remains upbeat on the company’s prospects as the areas are “highly prospective” and maintains Tullow’s African assets are “undervalued” given their strategic importance.
The broker said: “Confirmation of Côte d’Ivoire’s thermal maturity and the first discovery of thick high-quality reservoirs in Sierra Leone keep the play alive.”
Despite reducing its target price to 1,890 pence from 1,920 pence, the broker keeps its ‘overweight’ stance on the company.
Shares dipped in early trading to 1,493 pence.