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Despite disappointing update Tullow Oil remains attractive for braver investors
- The company’s drilling pipeline still offers attractions to investors
- Tullow Oil has cut its production target for the second time this year
- The Share Centre continues to recommend Tullow Oil as a ‘buy’ for higher risk investors
As oil and gas exploration company, Tullow Oil, provides a Q3 operational update, Nick Raynor, investment research analyst at The Share Centre, explains what it means for investors.
“Tullow Oil has announced a cut in production targets for the second time this year, forced by slower production in its Ghana operations. This was caused by mechanical issues related to the design of the new wells. The company has reassured investors that these issues are not uncommon in new developments and corrective work is ongoing.
“However, record full year results are still expected for 2011 and the outlook for 2012 remains positive. Investors will be pleased that there appears to be plenty of drilling opportunities in the pipeline, with two wells being mobilised in Sierra Leone. Tullow Oil’s focus remains in Africa, however the company has been expanding into new drilling regions.
“This update may mean investors are slightly sceptical as they have been let down already this year, hence the 5% fall in the share price in early morning trading. However, some of the braver ones may see this weakness as a buying opportunity. We would warn that there could be further disappointment until the problems have been ironed out and Tullow Oil is therefore deemed as a higher risk investment.
“We believe Tullow Oil still has great potential in Africa and the problems in Ghana will be overcome. The company has attractions for growth seeking investors willing to take the risk.”
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
Risk Warnings:
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Back2011-11-10 08:47:04 © Moneyextra.com