Tullow Oil complete Angola offshore deal

TULLOW Oil Has concluded a farm-in agreement with Sonangol P&P to take a 15% interest in Block 10 offshore Angola which marks another significant development for the independently-owned oil company.

Shares in Tullow fell four cent following the announcement to €3.54 on the back of some profit taking. Chief executive Aidan Heavey, said of the move: “This is the first step in our strategy to gain a significant position in the country and we look forward to doing further business in the region.”

Recent moves in Britain by German utility E.ON suggests Tullow’s share price will do well in the coming months. The German group acquired 15 gas fields in the North Sea from Caledonia Oil and Gas for £450 million (€668m).

On the back of that deal Davy analyst Job Langbroek said he was upgrading Tullow’s price target to 275p Stg from 235p.

Gas has become a prized target as scarcity of supply drives up prices.

Market analysts were surprised at the value put on Caledonia by the German group and they expect the deal to reflect well on Tullow.

In particular they refer to the Schooner and Ketch takeover carried out by Tullow in December 2004 at a cost of £200m.

According to Mr Langbroek that deal has now doubled in value based on the latest German deal and for that and other reasons he has revised Tullow’s share price target upwards.

Tullow has expanded elsewhere in recent times.

Its acquisition of Energy Africa last year more than doubled the size of the group.

Tullow produced an average of 57,350 barrels of oil per day per day, more than double the same period last year, and expects to average 60,000 in the second half.