Shares in Tullow Oil pushed higher on Monday as analysts with Canada's RBC Capital Markets upgraded their rating on the stock due to the group's exploration potential and as the price of oil continued to rebound from its pre-Christmas lows.
RBC now rates Tullow Oil’s shares as “outperform”, the equivalent of a “buy” recommendation, having upgraded its stance from “sector perform”. It has also raised its price target for the stock to £3 from £2.75 – offering more than 50 per cent upside from Friday’s closing price.
Shares in the group, led by chief executive Paul McDade, rose as much as 5.5 per cent on the London stock market to £2.06 on Monday.
“Although management has a tight rein on the company’s finances, Tullow’s portfolio offers the potential in 2019 for development and exploration-led upside,” said RBC analyst Al Stanton.
Founded in Ireland but now headquartered in London, Tullow raised $750 million (€654m) in a deeply-discounted stock sale to shareholders in April 2017, and refinanced more than $3 billion of debt facilities before that year was out.
The price of oil, as measured by Brent crude futures, has rallied from a low of $50.47 on Christmas Eve to as high as $58.90 on Monday, helped by a weakening of the US dollar and an agreement by the Organisation of the Petroleum Exporting Countries (Opec) as well as some non-member countries to cut supply from this month.
The rebound followed a slide in oil prices to 15-month lows on December 24th amid concerns about slowing global economic growth.
