Broker snap: High risk/reward on Tullow's next well

9th Jun 2009 12:03

Oil stocks generally failed to sustain early gains in London on Tuesday despite the price of Brent crude edging up by almost a dollar a barrel, but Tullow Oil remains firm after an upbeat note on the company from Deutsche Bank.Tullow remains Deutsche's top pick among UK oil explorers and producers, following a spectacular run of success with its exploration prospects.'Tullow is differentiated from its peers by having the best exploration track record; around 30 wells drilled in Ghana and Uganda, just one dry hole, opening two, one billion barrel plus, frontier basins,' said the German bank, while noting that Tullow's next well, Ngassa-2, is 'undoubtedly the most binary it has drilled for some time.'The Ngassa-2 well 'tests deep potential below Lake Albert (Uganda), where reservoir development/hydrocarbon charge remain key risks. However, the upside is also material. Ngassa could double the discovered gross resource in Uganda, tripling Tullow's net exposure,' Deutsche Bank said.The bank has raised its price target for Tullow from 1010p to 1165p.