Tullow Oil (TLW) tanked more than 16% in mid-March after the 2021 full-year earnings report showed that it may still have a long way to go before giving profits to its shareholders.
Tangled in debts and operational challenges, the London-based oil and gas explorer has not yet tapped the gain in oil prices, unlike many of its peers. But soaring crude oil prices, which have crossed $100 a barrel this year, have offered support to the TLW share price.
Will the company maintain its momentum? The article discusses the latest Tullow Oil share price predictions from analysts, as well as its latest news and performance.
Tullow Oil stock price has been on the roller-coaster ride in the past two years. The Tullow Oil share price history showed its stock dropped to a record low of 7.17p on 18 March 2020, at the onset of the coronavirus pandemic.
By the end of the first half of 2020, the London-based company ran negative free cash flow and $3bn debt as oil demand collapsed following Covid-19 mobility restrictions and output drop. Its stock value declined 53.78% in 2020.
Tullow Oil share chart showed its stock value gradually recovered in 2021 in line with rising oil prices as demand recovered as countries relaxed restrictions. The company refinanced debts in May 2021. It also completed sales of some of its interests to improve financial performance.
On 16 June 2021, the company’s share price hit the highest for the year at 66.22p after CEO Rahul Dhir announced that it had raised over $700m from sales of its interests in Uganda, Equatorial Guinea and the Dussafu Marin permit in Gabon.
The stock retreated in the second half of 2021, trading at around 45p by end of the year. However, the price managed to recoup its 2020 losses, gaining 57.03% over 2021.
Entering 2022, Tullow Oil continued its gain, briefly crossing 61p on 18 January as Brent Crude touched a fresh seven year high on rising post-pandemic demand.
The gain did not last long. On 16 March, Tullow Oil’s stock plunged more than 16% on the day to close at 51.88p following disappointing 2021 full-year results.
In the latest Tullow Oil share news, it announced expansion of its operation in Ghana by acquiring Occidental Petroleum’s (OXY) interest in the TEN and the Jubilee fields. With the acquisition, the company’s interests increased to 38.9% in the Jubilee fields and to 54.8% in the TEN fields. The acquisition, valued at $118m in cash, brought an additional 5,000 barrels of oil equivalent per day (boepd) of production.
The deal fostered bullish sentiment, pushing the stock to return to above the 60p level. The share price has gained 21% year-to-date.
Tullow Oil share analysis showed short-term sentiment was slightly bullish at the time of writing (20 April). The majority of moving averages were giving ‘buy’ signals. The relative strength index (RSI) reading of 55.62 kept neutral. The TLW share price has been trading above its 200-day simple moving average (SMA) of 49.17p.
Tullow Oil fundamental analysis: Latest earnings
With many oil and gas companies enjoying higher earnings due to rallying energy prices, Tullow Oil’s revenue fell to $1.273bn in 2021, down from $1.396bn in 2020.
The company attributed the drop to lower oil and gas production. Tullow Oil pumped 59,200 boepd (barrels of oil equivalent per day) last year, a 21% decrease from 74,900 boepd in 2020 due to the sale of TLW’s interests Equatorial Guinea and the Dussafu Marine Permit in Gabon, as well as lower-than-expected production from the TEN fields in offshore Ghana.
The company’s loss after tax dropped to $81m in 2021 from $1.222bn in 2020, owing to write-offs for exploration costs, impairments, restructuring costs and other provisions.
Tullow oil projections: 2022 guidance
For 2022, Tullow Oil expects to produce 59,000 to 65,000 boepd following completion of Occidental Petroleum’s interests in the Jubilee and the TEN fields. The 2022 production guidance was revised up from an initial forecast of 55,000 to 61,000 boepd.
The company set operating cash flow guidance of $750m and full year free cash flow guidance of $100m, assuming oil price stays at $75/bbl for the remainder of the year.
On the operation side, Tullow oil plans to drill three new wells at Jubilee and three new wells at TEN. It also expects to secure a gas commercialisation agreement in Ghana.
TLW plans to spend $350m of capital expenditure in 2022, of which $270m will be for operations in Ghana. The remaining funds will be for a non-operated portofolio, Kenya’s operation and exploration.
Overall, Tullow Oil plans to spend $1.6bn capex from 2022-2026, according to the company’s 2021 full year results presentation.
“I think about 70% of future CapEx is on drilling. I mean, lot of wells to be drilled and lot of focus on doing it well,” said TLW’s President Director Rahul Dhir in the presentation.
Tullow Oil share price forecast: Analyst sentiment
Speaking of the Tullow Oil stock future price potential, Mikhail Karkhalev, analyst at Capital.com, noted that the company had had a difficult decade:
However, according to the analyst, the company has revealed stable performance lately, and the low TLW stock price could attract traders’ attention.
Analysts at Zack.com were of the view that Tullow Oil’s significant positions in discovered and emerging basins and focus on capital discipline could result in a noticeable improvement in profitability.
“In particular, the oil and gas finder’s operational excellence and technical expertise stand it in good stead,” Zack.com wrote in February.
The Covid-19 pandemic which caused low oil prices had forced most oil explorers to be more disciplined in capital spending and reduce their unit costs.
“These actions may limit short-term output, but they are expected to preserve cash flow, support balance-sheet strength, and help the companies emerge stronger in the long run,” it added. Zack.com rated Tullow Oil a ‘hold.’
Tullow Oil (TLW) stock forecasts: Price targets for 2022 – 2025
Are Tullow Oil shares a ‘buy’, ‘sell’ or ‘hold’? At the time of writing (20 April), a consensus of eight analysts tracked by MarketBeat suggested a ‘buy’ for Tullow Oil’s shares. Four analysts rated the stock as a ‘buy’ and four rated it a ‘hold.’
Analysts set an average 12-month Tullow Oil share price target of 72.38p a share. The highest Tullow Oil stock forecast suggested it could rise to 87p and the lowest expected it to trade at 63p.
Meanwhile, algorithm-based forecasting service Wallet Investor provided a longer-term Tullow Oil stock forecast for 2022 and beyond.
As of 20 April, Wallet Investor was holding a bullish outlook for Tullow Oil stock in the short term based on multiple technical readings, projecting TLW to rise to 61.945p on 4 May. However, for December 2022, the algorithm expected the stock to decline to an average price of 1.786p per share.
The service expected TLW stock to collapse to 0.000001p in September 2023 and didn’t give further estimates for a Tullow Oil share price forecast 2025 and 2030.
When looking at any TLW stock predictions, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading and bear in mind that past performance is no guarantee of future results.
It’s important to do your own research. Your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. You should never trade more than you can afford to lose.