Tullow Oil slumps on Goldman Sachs, Macquarie downgrades

Shares in exploration company fall over 10 per cent on two downgrades

Shares in London-based Tullow Oil, headed by Aidan Heavey, fell 8.8 per cent in midafternoon trade on Tuesday to €3.27. (Photograph: Nick Bradshaw)

Tue May 03 2016 - 14:50

Joe Brennan

Tullow Oil shares slumped in Dublin on Tuesday after influential brokers Goldman Sachs and Macquarie each downgraded the stock on valuation grounds.

Shares in the London-based oil exploration company, headed by Aidan Heavey, fell by more than 10 per cent in late afternoon trade to €3.20, with a simuilar fall in London trading.

In a note to clients on the oil exploration and production sectors, Goldman Sachs cut its view on Tullow to "neutral" from "buy". It said that the company's expected capital expenditure in East Africa will eat into free cash flow from 2018.

Macquarie meanwhile, cut Tullow to "neutral" from "outperform", saying it sees a sale of the company's Uganda assets as a way of bolstering its balance sheet.