A big vote of confidence and a positive valuation readacross offered by corporate activity on its licences in east Africa is lighting a fire underneath the Tullow Oil (TLW) share price.
Shares in the FTSE 250 oil explorer gains 14% to 248.8p as the E&P arm of Danish shipping giant AP Moeller-Maersk (MAERSK-A:CPH) agrees a farm-out with Tullow's partner Africa Oil (AOI:TSX) over exploration blocks offshore northern Kenya and southern Ethiopia.
The deal sees Maersk make an upfront payment of $365 million to Africa Oil with future contingent payments of up to $480 million. The acquired licenses cover exploration areas and encompass eight recent oil discoveries. Four of the blocks are operated by Tullow and the remaining by Africa Oil. FirstEnergy Capital analyst Stephane Foucaud says the agreement implies a value for Tullow's stake in these assets of 115p compared to his previous estimate of 87p.
He comments: 'This is a big vote of confidence on the quality and materiality of these assets that have been plagued by uncertainty on capital gains tax and routing of the export pipeline.'
