tullow at 690 p.target, page-3

'..Currently London's 80th largest stock by market cap, it looks a shoo-in after next Wednesday's seasonal reshuffle.


...Tullow's simple strategy - using cash thrown off by it's mature but stable North Sea gas assets to take big punts on new wells - has borne fruit. Management, normally cautious in outlook and reserve estimates, now talks of "transforming" the group's growth potential. Newly struck wells in Ghana and Uganda could each more than double Tullow's current production output. Then there is Namibia, where the company looks well positioned to export gas to South Africa before long.

These three big engines give Tullow a more rounded portfolio than its peers. Edinburgh's Cairn Energy, for example has placed most of its chips on India, while Soco International, based in London, has gone big on Vietnam...

..Membership of the UK's blue chip index should give Tullow shares a further lift. But at 540p currently, the valuation still lags most estimates of nav. The longer it lags, the more vulnerable the company looks to a bid.

Aidan Heavey, founder and CE, says he has no desire to sell. But if crude prices stay high, Heavey may find that Tullow's stay at the top table is short lived.