Former FTSE 100 oil explorer Tullow Oil (TLW) is up 4.3% to 435.9p (up as much as 9% in early trading) as this weekend the wonderfully-named International Tribunal for the Law of the Sea (ITLOS) in Hamburg rules in Ghana’s favour on a maritime dispute with Ivory Coast leaving the path clear for the development of the TEN project.
Located in the disputed area TEN is expected to be brought on stream in mid 2016. ITLOS rejects Ivory Coast’s request that Ghana be ordered to suspend all oil exploration and exploitation in the area under dispute although it does rule out any new drilling for now.
According to Tullow the project is more than 55% complete and all of the 10 wells expected to be online at first oil are already drilled. A final decision from ITLOS is expected in late 2017.
Westhouse Securities reiterates its ‘buy’ recommendation and 600p price target and comments: ‘Achieving first oil at TEN next year is an important milestone for Tullow in delivering the significant production and cash flow growth that is core to our positive investment thesis.’
FirstEnergy analyst Stephane Foucaud stays at ‘speculative buy’ with a 470p price target but notes the news may already be priced in. ‘We note that Tullow’s share price has already appreciated by over 40% since [BOLD] Royal Dutch Shell (RDSB) announced the acquisition of [BOLD] BG (BG.), representing one of the best performances among the large UK E&P names. We therefore anticipate that this weekend’s positive news is already somewhat priced in the share and we would suggest taking profit on highs.’