- Summary:
- What is the outlook of the Tullow Oil share price? We explain why it has gone nowhere even as crude oil price has jumped.
The Tullow Oil share price has not benefited as the price of crude oil has jumped to the highest level in more than a decade. The TLW shares are trading at 50.94p, about 20% below the highest level this year. As a result, the company’s valuation has dropped to about 730 million pounds, making it a significantly small-cap energy company.
Tullow Oil is an oil and gas company that focuses on smaller markets like Kenya, Ghana, and Gabon. It also has smaller operations in the United Kingdom, Argentina, and Guyana. As a result, the company benefits substantially when oil prices rise. In 2021, its revenue rose to over $1.273 billion, while its gross profit jumped to over $634 million. As a result, its total loss narrowed from over $1.22 billion in 2020 to just $81 million after-tax. It also lowered its net debt from $2.3 billion to $2.1 billion.
Tullow Oil expects an underlying cash flow guidance to remain at $750 million. This view assumed that oil prices would average at $75 per barrel. Recently, however, prices have remained above $100, signalling that the company’s cash flow will be significantly better. In addition, some analysts expect that oil prices will rise to over $150 later this year.
Tullow has also made some announcements recently. For example, it announced that it would invest over 89 million pounds in Ghana fields. At the same time, Indian Oil Corp is thinking of investing in Tullow’s Kenyan project.
Tullow Oil share price forecast
The daily chart shows that the TLW share price has been ugly in the past few months. This is unlike oil majors like Shell and BP, whose shares have risen to multi-year highs. In addition, Tullow’s shares are trading at the 25-day and 50-day moving averages while the MACD has moved below the neutral level. Therefore, the Tullow stock price will likely remain in this range and then rebound as oil prices jump. If this happens, the next key level to watch will be at 60p.
