Tullow Boosted by Oil Discovery; MARKET REPORT
Byline: by Geoff Foster
TULLOW Oil was a penny stock five years ago. Now look at it. It rubs shoulders with the big boys in the Footsie and has a market capitalisation of [pounds sterling]8bn.
Founder and chief executive Aidan Heavey has masterminded its progress and continues to roll out bullish news, particularly from its substantial activities in Africa. It certainly can do no wrong in Uganda.
It's shares gushed 26p further to 1021p after announcing a further discovery onshore Uganda. The Ngara well in Block 2 has encountered 8m of good quality net oil pay. It is the 10th discovery on the Nile Delta play in the Butiaba region of Lake Albert and analysts say it has probably added around 20m barrels of oil to the resource base.
Dealers expect to hear more bullish updates from Uganda before the end of the month. Oriel Securities reckons the next news should come from the important Ngassa-2 well, which is due to complete this month and could be worth between 90p and 150p a share to Tullow.
Aussie broker Macquarie recently lifted its 12-month target price to [pounds sterling]14 from [pounds sterling]10 as it sees a number of value creation catalysts in the handful of defined exploration and appraisal wells to be drilled in the secondhalf of the current year.
Dana Petroleum, the oil sector's other darling, took a knock. It was sold down to 1340p before closing 19p off at 1403p after Tethys Oil, the group's partner in the Tafejjart-1 exploration well onshore Morocco, announced that the well is to be plugged and abandoned as the gas discovered is unlikely to be in commercial quantities.
Dana revealed in March a significant gas find off the north African coast, about 40km from Morocco, which sent the share price soaring. Since then rumours of a [pounds sterling]20-a-share cash bid from either German utility RWE or BP (0.2p easier at 511.3p) have been rife. No takeover has yet materialised but bulls were relaxed, believing that developments in Morocco would help the stock continue to rise. Many yesterday trousered some profits.
Premier Oil slipped 16p to 1274p but broker Canaccord has a target price of 1500p. It says Premier has one of the busiest drilling schedules in the sector with over 20 wells due to spud over the coming 18 months. It only takes a couple of successes to make a difference. …