Tullow Oil initiated at 'sell' by Cantor Fitzgerald

The brokerage acknowledged that Tullow’s share price has seen a considerable decline over the last 12 months, but anticipates that there is more near-term pain to come for shareholders.

It said that an over-reliance on debt to fund risky ventures could prove costly.

“In the current climate, a shift in focus to expenditure on development assets at the expense of exploration is a sensible strategy; however this will require drawing down further debt finance against a backdrop of a volatile commodity price environment,” it said.

Cantor also said that any further production misses and/or unsuccessful exploration attempts will weigh on the company’s shares.

The key value drivers in Tullow’s portfolio stem from its Ghanaian asset base, said Cantor.

“However with much-publicised difficulties in this region both at a political and operational level, we expect little positive news flow to drive near-term share price growth.”

At 1420 BST, Tullow Oil shares were 2.3% weaker at 386.70p.