tullow ftse 100 bid

New discovery boosts Tullow's FTSE 100 listing bid
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Go By Joe Brennan
Friday August 24 2007


TULLOW Oil's chances of joining the prestigious FTSE 100 were given another boost yesterday.


It follows news of the company's second African oil discovery this week pushed its stock higher for the fourth successive session. The stock has jumped some 15pc so far this week, bringing its market capitalisation to £3.46bn (€5.1bn) in London, where it has its primary listing, making it a strong contender for promotion to the FTSE 100 in next month's rejig of the benchmark index.

It is currently a member of the mid-cap FTSE 250 index. The group said yesterday it has discovered oil at the Mputa-3 appraisal well in the Kaiso-Tonya area of Uganda which could produce over 4,000 barrels of oil per day.

"The Mputa-3 well has exceeded our pre-drill expectations," said Aidan Heavey, chief executive of Tullow.

"The appraisal program is progressing well and remains on schedule to sanction the early production system in the fourth quarter."

The news came a day after Tullow announced it had made a second significant oil discovery in Ghana.

This find, at the so-called Hyedua-1 well in Ghana and covered by a licence in which Tullow has a 49.95pc stake, is probably connected to reserves covered at the nearby Mohagony-1 project, in which the Irish company has a 22.9pc interest.

"The successful test and the quality and scale of the (Uganda) results mean that we can unwind most of the risk factor we applied to our reserve estimates (for Tullow)," said Job Langbroek, an analyst at Davy, adding that he has raised his price target for the stock to 600p from 575p.

A number of other brokers have also raised their view of the stock, with Morgan Stanley increasing its price target to 610p from 575p, while Citigroup's goal has jumped to 580p from 525p.

Analysts at UBS said the second oil discovery in Ghana is the more significant of the two announcements this week.

The combined reserves from the two fields in Ghana are estimated to contain as much as 800m barrels of oil.

Tullow is hoping new discoveries in Africa will boost reserves after it cut its production forecast for the current year, due to drilling delays in the North Sea and declining natural gas prices in Britain.

The company said last month that daily output in 2007 would average 72,000 to 75,000 barrels of oil equivalent a day, compared with a previous target of more than 80,000 barrels.

Shares in Tullow ended yesterday's session in London up 2.43pc at 494.75p.

GOOD LUCK TO ALL HOLDERS OF TLW STOCK