With the group’s high flying days a somewhat distant memory, could this discovery be a return to form?
Tullow Oil (TLW) sees rise following South American oil discovery
- Jethro-1” exploration well in Guyana has resulted in a “substantial and high value” oil discovery.
- Despite a comparatively high debt level the group has resumed paying a dividend, signalling to some investors the worst is behind them.
- We continue to view the shares as a ‘buy’ for investors willing to accept a high level of risk.
Investors with a long memory will remember the days when Tullow Oil was a high flyer in the sector and appeared to find oil with relative ease. Yet for many these days will be a distant memory and the share price has reflected on a rather barren period. So today’s announcement that the group has discovered a significant oil strike off the coast of Guyana has led to early excitement and a 17% rise in the share price.
The group still has a relatively high debt level, although the fact the group has resumed paying a dividend may signal to some investors that the worst is behind them and of course they will be highly geared to volatile oil prices.
Our view on Tullow Oil - Buy
We continue to view the company as a high risk ‘buy’ for investors looking for capital growth and in the hope there could be more good news to come.
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