Credit Suisse cuts target price for Tullow Oil

On Friday analysts at Credit Suisse lowered their price target on shares of oil explorer Tullow Oil to 800p from 885p beforehand.

That came on the heels of their recent reduced forecasts for the price of oil, although the impact of that was expected to be partially offset by a moderately lower pound.

“Our core NAV falls to ~620p (from ~670p) with the rest of the delta to our target price coming from exploration. The risk/reward now starts to look more favourable, particularly if you believe in further value creation from Kenya; these non-Wall Street barrels (e.g., Jubilee, Kenya etc) can be had (as an investor or as an oil company given the inability for many to add sufficient barrels organically) at relatively attractive prices now.”

However, the Swiss broker cautioned that there were four factors worth remembering: (1) Majors appear to be focused for now on the 'new religion' of capital discipline and restructuring their businesses, (2) US oil companies are selling international assets, (3) NOCs are absent for now, and (4) the uncertain oil price outlook. It is important that the SUP/DEM fundamentals establish a firm floor in the $90s stability is welcome.

The recommendation on Tullow was kept at ‘neutral’.