Davy Stockbrokers is highlighting Tullow Oil as offering good potential gains for investors forecasting that the shares could appreciate from current levels of around 75p sterling to £1.

The key factor underpinning its optimism is its acquisition of a package of North Sea gas assets from Arco and BP Amoco last year. The brokers suggest the deal will transform the company moving it up a league and changing the risk profile completely.

The most important aspect is that it will provide cashflow for Tullow for the next few years that will provide funds for other projects, such as in West Africa and other exploration work without having to raise further cash in the markets.

The mix of assets is also much improved while results from the ongoing drilling programme in the North Sea and in Bangladesh within the next couple of months should provide good trading opportunities and liquidity for the shares.

Davy states that if Tullow's portfolio lives up to its potential, especially its assets in the Indian sub-continent region, it could become a corporate target. Davy believes these factors will influence the share price positively and present a good buying opportunity for investors.