Tullow Oil PLC (LSE:TLW) has come into favour among Jefferies analysts on the back of high commodity prices and growing production prospects.
In a research note, Jefferies pointed to improving production at Tullow’s Jubilee field offshore Ghana as key in its decision to upgrade the firm’s rating from ‘underperform’ to ‘hold’.
Risks on some US$633 million worth of senior notes, which are due to mature in 2025, have largely been priced into Tullow’s shares meanwhile, the bank added.
It said lower-than-anticipated capital expenditure in the future also bodes well for Tullow, which has benefitted alongside peers from higher commodity prices in recent months.
Tullow received a hefty upgrade on its share price target as a result, from 25p to 35p - marking a prospective rise of 5% on Friday’s close.
“Tullow equity remains a play on debt refinancing risk versus operational improvement,” Jefferies added.
Tullow is due to provide a trading upgrade in early November, with Jefferies suggesting trends toward 100,000 barrel-per-day production at the Jubilee field would mark a positive sign.