Tullow Oil shares up after RBC Capital Markets upgrades to outperform
Updated : 11:53
RBC Capital Markets has upgraded Tullow Oil from ‘sector perform’ to ‘outperform', but has cut its target price from 400p to 260p due to low oil prices.
In a note sent on Monday, it said despite oil prices dropping to new lows, the company can push on.
“In H1/16 we expect Tullow to extend its asset-backed debt facilities, and this should enable investors to refocus on the potential of those assets.”
It said while three months is a long-term outlook in the current oil market, Tullow’s $3.7bn Reserve Based Lend is underpinned by its probable and proven reserves.
It was also positive about the company’s outlook.
“At 156p, a Brent oil price of ~$37/bbl and an EV/boe $5/boe 2P+2C, the risks are, we believe, to the upside.
“Looking ahead, we think $60/bbl oil could be a key resistance point for a recovering oil price.”
The market reacted positively to the note, with shares up 5.5p (3.55%) to 160.6p at 1133 GMT.