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Tullow Oil weak as Jefferies downgrades its rating in review of the exploration & production sector

The US broker cut its stance for Tullow to 'hold' from 'buy' and reduced its target price to 155p, from 250p previously, pointing out that a refinancing in 2017 “remains a risk”

Oil rig
In the same note, Jefferies also downgraded its rating for EnQuest to ‘hold’ from ‘buy’

Tullow Oil PLC (LON:TLW) was a big faller today after Jefferies International downgraded its rating for the mid-cap oil producer to ‘hold’ from ‘buy’ as part of a review of the exploration & production sector.

The US broker also chopped its target price for Tullow to 155p, down from 250p previously, pointing out that a refinancing in 2017 “remains a risk”.

READ: Tullow Oil boasts of “strong performance” as it releases first half results

In late morning trading, Tullow shares were 4.5%, or 7p lower at 149.5p.

EnQuest downgraded too

In the same note, Jefferies also downgraded its rating for peer EnQuest PLC (LON:ENQ) to ‘hold’ from ‘buy’, cutting its target price to 30p from 64p.

The broker noted that the performance of EnQuest’s Kraken field in the North sea has disappointed in the first two months of production.

EnQuest shares were 3.9%, or 1p lower at 25p.

Premier Oil gets an upgrade

But the broker raised its rating for Premier Oil PLC (LON:PMO) to ‘buy’ from ‘hold’ and hiked its target price to 90p from 68p.

Jefferies pointed out that after record production in 2017, Premier Oil will see further production growth into 2018 from the Catcher field and noted that Mexico’s Zama discovery “appears a true world class find”.

READ: Premier Oil counting down to Catcher field start-up as FPSO sets off

But Premier Oil shares were still 3.6%, or 2p lower at 54p, reflecting a lower oil price on geopolitical concerns,  despite confirming that the countdown is on for the Catcher field start-up in the North Sea.

Genel boosted by stance hike

Jefferies also upped its stance for  Genel Energy PLC (LON:GENL) to ‘hold’ from ‘underperform’ with an unchanged 145p price target – with the stock adding 1.6%, or 2.50p at 156.75p.

Commenting on Genel, the broker said “Poor performance at the Taq Taq field will likely continue but the Tawke field has avoided such reservoir issues, and Peshkabir production is increasing.”

Quick facts: Tullow Oil plc

Price: 67.8 GBX

Market: LSE
Market Cap: £953.66 m

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