Broker snap: Credit Suisse highlights potential at Tullow

30th May 2012 11:14

Credit Suisse has reiterated its outperform rating and 1,841p target price for oil giant Tullow, highlighting developments in Guyana and undervalued operations elsewhere.The wildcat Jaguar-1 well in Guyana is "looking good", according to operator Repsol, which sends an encouraging message to 30% stakeholder Tullow, Credit Suisse said in a research note. Meanwhile, the broker says that recent updates on its operations in Kenya and Ehtiopia are positive, though not much of this long-term play is being priced into Tullow's shares.The broker estimates that these operations could eventually be worth around 1,000p per share fully unrisked, compared with the current risked value of around 100p per share."Importantly, this is led by TLW's Uganda exploration team and this play should have a much lower commerciality threshold compared to Uganda, particularly due to the substantial infrastructure synergy potential in the region."Tullow's shares were trading 2.91% lower at 1,433p by 11:06; the oil and gas producing sector was on the whole out of favour on Wednesday morning after China quashed rumours of additional stimulus measures. Oil prices were also lower ahead of a report tomorrow which is expected to show that US stockpiles rose to their highest level since 1990 last week.BC