Tullow Oil PLC (LON:TLW) was one of two names on Exane’s ‘best ideas’ board as the European bank reviewed the exploration and production sector with an eye on 2019.
Analyst Alwyn Thomas, in a note, highlighted that last month’s capital markets day presentation had improved Exane’s view on Tullow’s underlying asset value and free cash flow heading into the New Year.
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Exane rates Tullow at ‘outperform’ with a price target of 250p, suggesting some 38% upside to the current price of 180.75p.
“At current prices, it offers c30% upside to our base estimates, and provides the highest leverage to oil prices (+/- c100p for USD 10/bbl move) for those who are more constructive on the macro outlook,” the analyst said.
“Moreover, Tullow will start drilling two or three of the most closely watched wells next year.”
Highlighting its reasons behind its positive rating, Exane said that Tullow’s operational turnaround is gathering momentum, its financial outlook is improving and described an investment in the company as “an effective call on higher oil prices”.
Tullow’s upcoming catalysts, according to Exane, will include a trading in mid-January, financial results due in February and exploration drilling offshore Guyana in the second quarter.