Source: Sharecast
Canaccord Genuity said the looming issues of SSN debt maturity have now been resolved, so equity holders now have "some breathing room". However, it stated the equity value still rests primarily on oil prices and the performance of Tullow's Jubilee field asset - which Canaccord expects to be "substantially shaped in the near-term" by the success of the infill drilling programme underway now. The first two wells delivered "good results" so far, with several more wells to be drilled in 2026.
The Canadian bank, which has a 'hold' rating on the stock, noted that Tullow had recently resolved credit concerns with refinancing completion expected Q226.
"We think the terms are appealing to the creditors (sweetened coupon, sign up fees/payments), less so for equity though they do provide a lifeline (c.2-year maturity extensions, some PIKs reduce cash coupon)," it said.
However, Canaccord also noted that an updated CPR valued Jubilee 2P reserves at $1.37bn, with negative value assigned to its TEN and Cote D'Ivoire assets.
"So excluding ongoing G&A, and assuming a wash for possible arbitration outcomes and receivable settlements, the 2P equity value at that oil price is broadly zero. Tullow believes there is further growth potential, but that would require further drilling into the 2030s and we think including much value for that is premature," concluded Canaccord.
Reporting by Iain Gilbert at Sharecast.com