DAVY VIEW

Tullow Oil’s final trading update for 2019 confirms guidance for 2019 and reiterates the outlook for 2020 – both of which are to be welcomed. At the same time, a reset of oil price expectations from $75/bl to $65/bl and an adjustment to TEN reserves are likely to result in a $1.5bn write-off. This reset of the balance sheet, allied to the business review underway, is targeted to set up a long-term sustainable platform for the business. Given the substantial share price adjustment and re-affirmation of the production profile, we are reinstating our ‘Outperform’ rating.