Deutsche Bank has upgraded its target for Tullow Oil plc (LON:TLW) by 25% to 300p, from 240p, and has highlighted a marked improvement in investor sentiment.
Analyst David Mirzai notes the 50% rally in Tullow’s share price from the share’s lows earlier this year.
He points out that production from the flagship Jubilee field is exceeding expectations, at around 100,000 barrels of oil per day while the newly added TEN field is flowing 40,000 bopd and the company now expects to start receive insurance pay-outs next month.
“We see this as supportive for sentiment and providing creditors with greater confidence on cash generation, which should support reaching agreement on its refinancing in early 2017,” Mirzai said.
He added: “We have long argued that part of the attraction of Tullow to generalists is as a liquid and leveraged play to gain exposure to the oil price.
“So yes, the oil price has strengthened during the last few weeks, but that should not mask the operational progress that has also enhanced group liquidity over the period.”
Deutsche rates Tullow as a ‘hold’.