Tullow Oil initiated at 'sell' by Cantor Fitzgerald

4th Jun 2015 14:12

Cantor Fitzgerald initiated coverage of Tullow Oil at 'sell' with a 342p price target.The brokerage acknowledged that Tullow's share price has seen a considerable decline over the last 12 months, but anticipates that there is more near-term pain to come for shareholders.It said that an over-reliance on debt to fund risky ventures could prove costly. "In the current climate, a shift in focus to expenditure on development assets at the expense of exploration is a sensible strategy; however this will require drawing down further debt finance against a backdrop of a volatile commodity price environment," it said.Cantor also said that any further production misses and/or unsuccessful exploration attempts will weigh on the company's shares.The key value drivers in Tullow's portfolio stem from its Ghanaian asset base, said Cantor. "However with much-publicised difficulties in this region both at a political and operational level, we expect little positive news flow to drive near-term share price growth."At 1420 BST, Tullow Oil shares were 2.3% weaker at 386.70p.