Tullow Oil upgraded to ‘buy’ at Bank of America Merrill Lynch

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Oil and gas exploration company Tullow Oil has been upgraded and given a ‘buy’ rating by Bank of America Merrill Lynch (BofAML) with drilling on its flagship TEN project to resume next year.

Previously rated ‘neutral’, BofAML upgraded the stock saying it offers a “compelling investment case”.

The bank said the resolution of a border dispute involving Tullow now puts it in a position to reduce its debt without asset disposals or the issuing of equity. That net debt, BofAML says, has been a “perennial overhang” for the company and the potential for that to reduce will put Tullow in a stronger position into next year.

Research analyst Rafal Gutaj wrote in a note to clients that there is an attractive opportunity to buy into the stock and upgraded Tullow’s price to 250p.

At present, Tullow is trading around the 188p mark and by lunchtime was up 2.89 per cent on the day. It is, however, off by 29 per cent since the beginning of the year. Its highest price this year was at the beginning of September when it traded at 299p.

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