Tullow Oil’s share price is now losing ground after gains yesterday
After having rallied as much as 17 per cent in Monday's trading, Tullow Oil's share price is today one of the biggest losers on the FTSE 250.
In late morning trading Tullow Oil was trading 5.13 per cent down at 216.40p. Yesterday Tullow Oil's share price reached 258.55p per share.
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Tullow’s share price rallied after a deal was announced between it’s partner African Oil and Moeller-Maersk, which was released through company announcements.
However, it emerged in a phone call afterwards that much of the deal was dependent on the amount of barrels of oil that will be found in the ground.
“Current estimates are that there are around 600m barrels of oil in Kenya, but yesterday the chief executive of African Oil revealed that the amount paid would depend on there being 800m barrels of oil or more,” said Mark Wilson, analyst at Jeffries. He added:
The industry, he said, is now “basically saying they are not certain the resource is going to rise but will pay for it if and when an increase comes”.
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What will be key is a trading update that Tullow Oil will give tomorrow.
“We will be looking for any comment from Tullow regarding this. Crucially you have to look for comments regarding resource expectation,” Wilson said.