Buy-Import-Export Premium Grade UGANDA VANILLA BEANS Buy-Import-Export Un-Refined Raw SHEA BUTTER
Tuesday July 5, 2011
As the market edges higher again, Tullow Oil is in the spotlight after a well received trading update.
The oil explorer said it expected record first half revenues thanks to increased production from its Jubilee field in Ghana - not a bad time to be producing given the current high oil prices. Tullow said Jubilee was currently producing 80,000 barrels of oil a day and this would increase to 120,000 barrels in August (a slight delay on its original programme). The company is also about to list on the Ghana stock exchange, with a 4m share offer closing yesterday.
In Uganda the company has signed a memorandum of understanding with the government and it expects to complete a $2.9bn asset sale with CNOOC and Total soon. And the company hopes there is more to come. The result of its first exploration well in South America is due in the second half, and there are also projects in Guyana, Liberia and Sierra Leone. Tullow's shares are up 17p at £12.70, and analysts at Jefferies said:
We reiterate our buy recommendation, £20 target price and we see Tullow offering a number of material play opening exploration results, backed by production growth from Jubilee.
And Angus McPhail at Investec was also positive:
Exploration results are due from Makore-1 in West Cape Three Points, Zaedyus in French Guyana, Jabbi in Pakistan, Cameron in the UK, and multiple wells in Uganda fields. Exploration upside of £4 a share in 2011 and 72p in 2012, on top of our core net asset value of 1420p drives our unchanged target price of 1893p.
The market is therefore applying an 11% discount to net asset value which is unjustified in our view, given the exploration track record, the monetisation/de-risking of the portfolio achieved through production and development in Ghana and Uganda, and the fact that Tullow is graduating from exploration and production to integrated player status.
With UK services coming in slightly better than expected, the FTSE 100 is up 8.15 points at 6025.69. If it remains in positive territory, it would be the eighth rise in a row.
Joshua Raymond at City Index has pointed out that it was almost a year ago when the index rose for 11 days on the trot, gaining 11% in the process. But Manoj Ladwa, senior trader at ETX Capital, cautioned:
The FTSE is treading water this morning as it manages to hover above the 6000 mark. While traders are still in bullish mode, many are likely to wait for the US open before committing funds.
Reckitt Benckiser, the Cillit Bang maker, is up another 64p at £35.52 following yesterday's talk of a possible £50 a share offer, perhaps from Unilever with some of the unwanted brands sold on to Colgate Palmolive. Procter & Gamble is another name which has been mentioned as a possible predator for Reckitt.
Miners were under pressure on vague talk of a possible Chinese rate rise. A couple of downgrades from Deutsche Bank did not help. Anglo American is off 4p at £31.11 as Deutsche cut its target from £38.50 to £37.60 while Antofagasta was also down 5p at £14.26.
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