Jefferies downgrades Tullow to 'hold'

Jefferies downgraded Tullow Oil to ‘hold’ from ‘buy’ on Wednesday, with the stock in sight of its new 245p price target, which was reduced from 250p, as it said "the story needs a new chapter".

"Ghana production remains the most positive element of current operations but with both Uganda & Kenya final investment decision timings still uncertain, Tullow needs a new material, commercial asset to drive the stock," Jefferies said.

It added that the highly anticipated Jethro exploration well, offshore Guyana, is the event to provide it but pre-drill risked value is close to being fully priced in.

Jefferies argued that trading at $26/boe per 2P reserves, Tullow remains at a premium valuation.

"Project sanction of Uganda would add 120mmboe of net 2P reserves we estimate, reducing the 2P metric to $18.4/boe and deleverage to our $2.46bn YE19e net debt would reduce the metric to $17/boe," it said.

At 1130 GMT, the shares were down 0.5% to 221.20p.