Broker snap: Jefferies highlights Tullow's potential for 2013

11th Dec 2012 10:56

Jefferies has reiterated its 'buy' rating and 1,800p target price for oil giant Tullow, saying that the company has 'material' exploration potential in 2013.The company announced on Tuesday morning that it has acquired Norwegian explorer Spring Energy and plans to dispose of its UK and Dutch North Sea gas assets to offload non-core projects.In a research report, Jefferies said: "Spring accelerates Tullow Oil expansion into the region and re-aligns the focus on finding oil from gas production."Furthermore, the broker believes that Norway is an "attractive place to explore" and the Spring team that joins Tullow "bring an extensive regional database and deep insights into the region".This purchase has continued Tullow's acquisition-led strategy which has shown its ability to unlock long-term exploration value within a portfolio, retain key staff and maximise shareholder value, Jefferies said."We believe the small acquisition of Spring provides Tullow Oil a strong base portfolio to further strengthen from over time focusing on core exploration play concepts in emerging areas such as the Hoop area of the Barents Sea."The broker reckons that Tullow has an attractive 2013 drilling programme with projects in its other high-value regions including Kenya, Mauritania, Mozambique and now the Northern Atlantic.However, the news did not sit well with investors on Tuesday with shares down 5.81% at 1,183p in morning trade.BC