Source: Sharecast
Canaccord Genuity said Tullow's trading statement illustrated some of the challenges related to the Jubilee site, the company's primary producing asset.
The Canadian bank expects it to take "a little time" for Tullow to gain greater clarity on the optimum development path for the field but said it also believes the Jubilee risk profile has increased.
"Alongside those critical operational issues, Tullow has some balance sheet work to do - a planned note repayment ($492.0m, maturing March 2025) and a more significant refinancing ($1.38bn notes, maturing May 2026). The first repayment looks covered by cash and untapped liquidity; the second presents greater challenges, in our view," said Canaccord Genuity.
"Tullow's equity value is very sensitive to small changes in Jubilee CoS and minor adjustments to oil price assumptions. That presents a significant valuation challenge, which even our quite tight parameter range (above) results in a wide equity valuation range of 14.0-36.0p. We continue to note the emerging and increasing risk around Jubilee and the possible implications for the company's planned refinancing in 2025."
Reporting by Iain Gilbert at Sharecast.com