Does Tullow Oil plc have more upside potential than BHP Billiton plc, Cairn Energy PLC and KAZ Minerals PLC after today’s news?

Is Tullow Oil plc (LON:TLW) (TLW.L) set to outperform BHP Billiton plc (LON:BLT) (BLT.L), Cairn Energy PLC (LON:CNE) (CNE.L) and KAZ Minerals PLC (LON:KAZ) (KAZ.L)?

Tullow Oil plc
Tullow Oil plc

Tullow Oil plc (LON:TLW) (TLW.L) has released positive news regarding the award of licences in Cote d’Ivoire. The company has acquired 90% stakes in 4 onshore blocks in the country. Cote d’Ivoire’s national oil company, Petroci, holds the remaining 10%.

The 4 blocks cover 5,085 square kilometres and are located on the coastline of Cote d’Ivoire – mostly to the west of Adidjan. The company believes the acreage will complement its existing exploration portfolio because the blocks are located in a proven petroleum system. If commercial discoveries are made then the maturity of the country’s oil industry suggests a relatively short and low-cost path to production.

The company intends to start work immediately on the licenses in order to allow a full tensor gradiometry (FTG) survey to start in early 2018. The early survey data will be used to assess the potential of the licenses and guide future acquisition of seismic data.

In the last year the Tullow Oil share price has fallen 29%. That’s a disappointing result compared to other resources stocks such as BHP Billiton plc (LON:BLT) (BLT.L), Cairn Energy PLC (LON:CNE) (CNE.L) and KAZ Minerals PLC (LON:KAZ) (KAZ.L). BHP Billiton has gained 10%, KAZ Minerals is up 217% and Cairn Energy has fallen 7%.

In my view, Tullow Oil has investment appeal for the long run. I feel the company is making good progress with its strategy and has an attractive mix of exploration and production potential. I feel the decision to increase production could be a sound move and may improve the company’s financial strength and overall sustainability.

As someone who is bullish on the oil and gas industry due to the potential for a higher oil price, I feel the Tullow Oil share price could deliver improved performance in the long run. Therefore, I think it has investment potential within what I see as an undervalued sector.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page