Tullow’s share estimate up after new find

TULLOW Oil Plc’s share estimate was raised 25% by Sanford C Bernstein & Co, as the explorer found the first oil in French Guiana, a new regional frontier.

Bernstein raised its forecast to 2,000 pence, from 1,600 pence, oil analyst Oswald Clint said in a note yesterday. That’s 43% above the last closing price of 1,395 pence on September 16.

“One of the key ways for an exploration company to deliver value for shareholders is to open up such new basins, given this is when the majority of reserves will be discovered,” Mr Clint wrote.

“Tullow is not an exploration gamble but offers investors balance,” with the London-based company’s success in exploration beating the industry average by 60%, he said.

The Zaedyus exploration well found more oil in the Demerara Plateau’s Eastern Slope frontier than Tullow anticipated, Tullow’s exploration director, Angus McCoss, said on September 9.

The discovery may eclipse Tullow’s Jubilee field in Ghana, which propelled the West African nation into the ranks of the top 50 oil states.

Tullow shares are up 27% already this month. Output will rise by about 10% a year to 2015 from projects in Ghana and Uganda, Mr Clint said.

Tullow will generate enough cash to spend about $500 million (€366.66m) a year on exploration.