Outlook remains positive Symbol Definitions $371 million Click for all Symbol Definitions
The company's share price performance has been disappointing, with prices dropping briefly to $2.05 last week. However, we believe the decline reflects short-term factors rather than any fundamental issues with the company itself.
-------------------------------------------------------------------------------- "We believe Tap's prospects remain solid with the current price factoring in little exploration success."
From a charting perspective, we believe the recent retreat in the share price represents a correction against the broader upward trend. Since 2000, Tap's share price has achieved gains in excess of 550%. A correction in the wake of such gains is a normal part of the price cycle and does not alter our longer-term positive outlook.
Although further near term volatility can't be ruled out, we believe the worst of the correction has passed. Solid support between $1.90 and $1.75 should underpin the share price in our view. Over time we expect a new base to form above this support.
Tap is progressing with its extensive drilling program throughout 2006, so investors should continue to expect volatility as results are communicated to the market.
In terms of timing, our initial recommendation on TAP has clearly been wide of the mark. Despite the initial setback, we remain confident of Tap's potential. The company's existing production facilities are generating solid cash flows that are being used to fund a significant exploration program. We believe Tap's prospects remain solid with the current price not yet reflecting the potential for future exploration success. We recommend Tap Oil as a Buy up to $2.32.
TAP Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
