tullow makes oil discovery off french guiana, page-7

Snoball this article from independent.co.uk/news will cheer you up even more with our Zaedyus wildcat find in the virgin Guyana Basin appraised with these words:
"Since Tullow holds a 27.5 per cent stake in the basin, we are therefore talking tens of billions of dollars, and possibly over a hundred, worth of oil."

Investment Column: Tullow's oil find has barrels of potential

Edited by Nikhil Kumar


Wednesday, 14 September 2011

Our view: Buy


Share price: 1,385p (-12p)

Tullow Oil, the FTSE 100 explorer, is walking tall at the moment after striking oil off the coast of French Guiana with its first "wildcat" exploration well in virgin hydrocarbon territory.

Analysts hailed the South American find as a "game-changer" for Tullow while the market sent its shares up by 15 per cent after its announcement on Friday adding more than 1.4 billion pounds to its market capitalisation.

Essentially, the find opens up a brand new carbon basin, the Guyana Basin, and analysts forecast that the six other wells Tullow is drilling in the vicinity could result in the discovery of between 1bn and 5bn barrels of oil. In the longer term, the basin could contain significant reserves beyond those seven wells which could keep the company going for the next 20 years.

With Brent Crude trading at around $112 (UK70Pounds) a barrel, at current prices Tullow's latest find could translate into between $112bn and $560bn worth of oil at the seven wells. Since Tullow holds a 27.5 per cent stake in the basin, we are therefore talking tens of billions of dollars, and possibly over a hundred, worth of oil.

Oil is a precarious business at the best of times with prices fluctuating considerably over time and little initial certainty about how fruitful potential yields will turn out to be. But with a market capitalisation of less than 13bn Pounds, Tullow looks substantially undervalued.

Not only is Tullow deeply involved, along with Shell, in what could well be the largest oil discovery this year, but its recent find makes it more likely to strike oil in the exploration blocks it has acquired in nearby waters off the coast of Sierra Leone, Liberia, Ivory Coast and Suriname.

Then there is the Jubilee oil field off the coat of Ghana, West Africa, where Tullow's discovery of 1.4bn of reserves in recent years has transformed it into a big player.

With a normalised price to earnings ratio of 32.3 times and an enterprise multiple of 10.1, Tullow looks like a strong buy.

http://www.independent.co.uk/news/business/sharewatch/investment-column-tullows-oil-find-has-barrels-of-potential-2354294.html