Proactive Investors - Tullow Oil PLC (LON:TLW) stock stayed steady in Tuesday morning’s deals after the London-listed oiler told investors its partners in Kenya have exited the appraisal and field development project.
The company, in a statement, said it will now retain 100% of Blocks 10BB, 13T and 10BA in the South Lokichar Basin following the exit of Africa Oil and TotalEnergies (LON:TTEF) from the joint venture.
Tullow noted that both partners left for “differing internal strategic reasons”.
Striking an upbeat tone, Tullow said it will seek new partnerships and told investors: “The board considers that owning 100% of the project creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a simpler joint venture partnership and streamlines project delivery.
“This is a low-cost development project that has the potential to unlock material value for Kenya.
“The prospective strategic partners have been informed. They remain engaged and detailed farm-out discussions continue with a number of companies.
“Whilst the process has taken longer than expected, Tullow remains focused on securing a strategic partnership this year.”
Stockbroker Peel Hunt reacted to the news by sticking with a ‘buy’ recommendation whilst highlighting that the market value for the London oil share gave little credit for the Kenyan assets.
“As Kenya is not included in our financial model (other than 2023 pre-sanction capex) or Core NAV, we reiterate our 80p target price and Buy rating,” Peel Hunt analyst Matt Cooper said in a note.
Cooper, meanwhile, added that operationally the Kenyan project continues to progress – with, in March, news that an updated field development plan was submitted to the Kenyan regulator, and, is under review presently.
On paper, Tullow’s inventory in Kenya rises to 461 million barrels of contingent resources from 231 million barrels as it absorbs back 100% of the project.
In London, Tullow shares were up 2% changing hands at 25.42p each.