Beta, not better. Reinstate coverage on KOS and TLW at Underperform: Reinstatement of Coverage

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Beta, not better. Reinstate coverage on KOS and TLW at Underperform: Reinstatement of Coverage

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Oils E&P Sector

Beta, not better. Reinstate coverage on

KOS and TLW at Underperform

Reinstatement of Coverage

Play quality over beta from here 23 June 2026

We see risk/reward skewed to the downside in high beta E&Ps and reinstate coverage Equity

on Kosmos Energy and Tullow Oil with Underperform ratings, while reiterating Ithaca Europe

Energy as our top pick in the European E&P subsector. Despite Brent oil/European gas Oils Exploration & Production

prices still sitting up ~30/40% YTD (USD terms), we believe equity markets have over- Cian Evans-Cowie >>

rotated into high-beta E&Ps, with share price rallies at Kosmos and Tullow materially Research Analyst

disconnected from fundamentals (see Exhibit 11). We therefore favour names offering MLI+44 (UK)20 7995 0940

underlying quality rather than beta from here – Buy Ithaca Energy. We lower our existing cian.evans-cowie@bofa.com

POs by >10% on average reflecting our updated house macro deck (see Exhibit 1). Matthew Smith >>

Research Analyst

MLI (UK)

+44 20 7996 7109Tullow Oil: maturity wall Ghana be tricky

matt.smith1@bofa.com

In our view, Tullow’s equity fails to adequately reflect the scale of its impending

Christopher Kuplent >>

refinancing challenge (amounting to a total of ~$1.4bn in 2028 (>5x market cap)). In our Research Analyst

base case, we estimate a cash shortfall of ~$800m, implying that Tullow would require MLI (UK)

+44 20 7995 8222

an additional >$45/bbl increase in oil price every year to meet its obligations through christopher.kuplent@bofa.com

cash flow generation. Needless to say, we believe equity value remains highly sensitive