Falling pound boosts FTSE and Tullow makes "substantial" oil discovery

“Sterling weakness linked to economic and political uncertainty helped give the export-driven FTSE 100 a lift on Monday.

“The index also took its cue from a strong showing in Asia overnight. Travel operator Thomas Cook was a notable faller as investors prepared for further pain thanks to a further £150 million share-based fundraise,” says AJ Bell Investment Director Russ Mould.

Tullow Oil/Eco Atlantic Oil & Gas

“Oil exploration is a high-risk activity but can also deliver significant rewards as today’s news from offshore Guyana demonstrates.

“Having followed a path trodden successfully in the region by US energy giant ExxonMobil, Tullow Oil and its smaller peer Eco Atlantic Oil & Gas are gushing higher on news of a big new find.

“Although the Jethro-1 well has identified a ‘substantial and high value’ oil discovery it could be months or even years before it starts producing, nevertheless it is an encouraging start to drilling on the Orinduik block.

“Investors don’t have too long to wait to see if this is a one-off or if a repeat performance can be conjured, with drilling on a second well set to get underway imminently.

“Guyana has been an area of industry focus for a number of years with Exxon making several large discoveries.

“For Eco it demonstrates the benefits of getting in early and then riding on the coat tails of larger partners with deeper pockets like Tullow and French firm Total, which it brought on board last year.

“For Tullow it represents a return to the kind of exploration success which lay behind its ascent from small cap status to the ranks of the FTSE 100, before a subsequent fall from grace.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.