Broker snap: Tullow shares look cheap after Uganda deal

16th Mar 2011 11:46

With the political dispute in Uganda now settled, UBS believes a significant overhang on the Tullow Oil's shares has now been lifted and raises its target price for the stock.The oil exploration and production company announced yesterday that it had signed a memorandum of understanding (MoU) with the government of Uganda that brings to an end the conflict over taxation, "which has been weighing on sentiment for almost a year," according to the broker."The MoU paves the way for Tullow to sell 66.7% of its Ugandan assets to Total/CNOOC and serves to draw a line under what has been a persistent bugbear for investors."The current share price looks very cheap to UBS, having underperformed the sector by 3% over the past week. With that, the broker keeps its 'buy' rating and ups the target price by 10% to 1,750p, from 1,620p.