Killik & Co says Tullow Oil is vulnerable to a takeover bid

12th Feb 2014 12:17

Broker Killik & Co believes Tullow Oil is vulnerable to a takeover bid after it unveiled lower annual profits and disappointing results from its first well in Mauritania.Killik, which is advising investors to buy the shares, said it remained positive on the African and North Sea oil explorer even after pre-tax profit fell 72% to $313m as a result of $200m of exploration write-offs. Revenue rose 13% to $2.65bn. Market consensus before the results was for $2.6bn of revenue and $272.3m of pre-tax profit.Tullow also said it was plugging and abandoning its first well in Mauritania after downbeat results, but said the well was a technical breakthrough that had opened up a potential new oil play in the region.Killik said Tullow had an industry-leading exploration track record and had consistently created shareholder value."Although recent drilling news has been mixed, we believe the high-impact exploration programme and the prospect of acreage farm-downs provide potential for a positive catalyst for the shares," Killik said."Finally, we believe ownership of highly prospective assets leaves the group vulnerable to a bid. We therefore reiterate our 'buy' recommendation."Shares in Tullow fell 3.4% to 816.5p by 12:20 in London.PW