Tullow's (TLW) shares have remained under pressure of late, as much of the newsflow in recent weeks has been negative. However, as we discuss below, none of the recent developments has materially affected 
Tullow's long-term outlook. We remain bullish that the value of Tullow's underlying assets and its ability to create value via exploration present an attractive entry point for long-term investors. Our fair value estimate and narrow moat rating remain unchanged.
Kenya protests end, drilling resumes: Tullow was forced to evacuate employees from a drilling site two weeks ago, as protests formed at one of its drilling locations, demanding more benefits from future oil development activities. Within a week, however, an agreement was reached - the federal government appears to have stepped in and quashed the protests - and Tullow is back to work. No delays to its previous drilling schedule are anticipated.
Latest dry hole in French Guiana lends a fair amount of support to the notion that Shell (RDSB), and not Tullow, did not run this drilling campaign well: Since hitting oil with its first wildcat well in French Guiana, Tullow relinquished operatorship of this license in exchange for cash to Shell. Since then, the drill campaign has had four dry holes in a row, the latest being announced this week. Tullow has been adamant that the problems in French Guiana are Shell's decision making and not the geology; the company went as far as predicting months ago this last well would not find oil because of where Shell located the drilling site. While Tullow has deservedly taken flack for its poor offshore results of late, the evidence increasingly supports the notion that at least in French Guiana, its major fault was to cede control to Shell, and not its drilling acumen. This area remains very prospective given the oil discovered, but it could be a year before the next round of exploration drilling kicks off.
Important exploration well results forthcoming in next few months: Within the next couple months, key well results from Mauritania (Fregate prospect), Kenya (Agete), Ethiopia (Tultule-1), and Norway (Mantra) will be reported. These are the highest-impact regions in Tullow's current exploration portfolio, and developments in these geographies--especially Mauritania and Ethiopia--could have a material impact on Tullow's share price.
T.E.N. farm-down continues to progress: With respect to Tullow's recent efforts to sell a partial stake of the T.E.N. project (offshore Ghana), the company disclosed that bids are expected by the end of the month. Fetching a fair price for this stake would go a long way to assuage investor fears about Tullow's ability to fund its future capital expenditure needs, while also proving the viability of carried interest as a transaction structure for future farm downs. Tullow hopes to also eventually farm down its Ugandan and Kenyan interests via carried interest deals.
North Sea asset sales to take longer than expected: The company disclosed that the initial bids for its mature Netherlands/U.K. gas assets have been underwhelming, and these fields will now try to be marketed individually, rather than as a package. Our sum-of-the-parts valuation estimates these properties to be worth $437 million, or 30p per share. In other words, a slightly lower sale price does not materially change our outlook.
