Tullow and Kosmos Ghana boost. But how do the oilers' prospects line up?
Published: 07:30 04 Jun 2025 EDT
Panmure Liberum has described the potential extension of oil production licences in Ghana as a “positive development” for both Tullow Oil PLC (LSE:TLW) and Kosmos Energy Ltd (LSE:KOS, NYSE:KOS), but warned that it is unlikely to shift investor focus away from more immediate concerns.
The two companies announced a memorandum of understanding with the Ghanaian government that could see licences for the Jubilee and TEN oilfields extended to 2040.
These fields are located in the West Cape Three Points (WCTP) and Deep Water Tano (DWT) offshore blocks, in which both Tullow and Kosmos have significant stakes.
In exchange, the joint venture partners have pledged to submit an updated development plan involving $2 billion of new investment.
This would include drilling 20 new wells, boosting gas output to 130 million cubic feet per day, and lowering the price of associated gas under a revised sales reimbursement structure.
Panmure Liberum analysts said the agreement could unlock “significant additional reserves” but noted that the financial and operational impact remains uncertain.
Key details, such as the timing of development, phasing of spending, and how the extra output might affect cash generation, are still to be clarified.
The broker maintains a “sell” rating on Tullow with a 9p target price, citing ongoing liquidity concerns.
The Ghana deal may increase the appeal of Tullow’s assets to potential buyers, but the company is still grappling with a $1.3 billion refinancing due next year.
In contrast, Panmure retains a “buy” rating on Kosmos with a 390p target.
The firm welcomed the longer-term upside from Ghana but noted that investors are likely to remain focused on nearer-term projects, particularly growth in the Gulf of Mexico and the Tortue LNG development in West Africa.
The potential licence extension, while encouraging, is not expected to materially change near-term forecasts for either group. However, it reinforces the long-term strategic value of their Ghanaian holdings.
Tullow shares were up 2.4% at 15.44p.
