Oil and gas exploration company Tullow Oil has been upgraded and given a "buy" rating by Bank of America Merrill Lynch (BofAML), with drilling on its flagship TEN project in Ghana to resume next year.
Previously rated “neutral”, Tullow Oil stock now offers a “compelling investment case”, said BofAML.
The bank said the resolution of a border dispute involving Tullow now puts it in a position to reduce its debt without asset disposals or the issuing of equity. That net debt, BofAML says, has been a “perennial overhang” for the company, and the potential for that to reduce will put Tullow in a stronger position into next year.
Research analyst Rafal Gutaj wrote in a note to clients that there was an attractive opportunity to buy into the stock, and upgraded Tullow's price to 250p.
Tullow climbed 2.35 per cent in London, its main market, to close at 187.6p. It is still off by 29 per cent since the beginning of the year.
